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Capital gain query

avni (ro) (25 Points)

28 April 2012

My father was alloted a DDA flat in 1989. I have only 1 sister and my mother died 2003.My father also died in Jan 2010.

I got the flat mutated and freehold on my name after taking Relinquishment Deed from sister and sold it on march 3, 2012 for 44 lacs.There was no will but as per fathers wishes I gave a cheq of 33 lacs to my sister so she can buy a flat for herself.

The remaining 11 lakhs I have kept with me for buying a janta flat as an assett investment and with idea of saving capital gain tax. My sister is buying a mig flat for 33 lacs by adding some more cash. Are tax liabilities of both of us fulfilled if I buy a flat utilizing 11 lacs. What if i manage to buy a flat for 9 lacs and how can i invest this remaing 2 laks

PLEASE ADVISE WHETHER OUR CAPITAL GAIN TAX IS MET BY DOING THIS

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4 Replies

Alok Siddapur (Consultant) (229 Points)
Replied 29 April 2012

Since there is no will according to the Law of Inheritence both of you will have equal share in the property. When your sister signed the relinqusiment deed she transferred the property to your name as per section 2(47) of Income Tax Act and capital gain is chargable on transfer of every capital asset. If the relinquisment deed is in the nature of Gift then transfer of your sister's share in the property to you is exempt under section 47. But the whole consideration is taxble under your hands. If you want to save tax, you have to treat 33 lakhs paid to your sister as loan, otherwise it may be taxable under section 64. You can use benefit of section 54 where you can buy another residential property and claim the cost as exemption or you can buy NHAI or REC capital gain bonds and claim exemption under section 54EC

HIMANSHU SHARMA (STUDENT) (117 Points)
Replied 04 February 2013

Sir i have paid advance for purchase of land, and that amount is forfeited by the seller, that loss if capital loss or revenue loss for me, and what is the treatment of this case.

Alok Siddapur (Consultant) (229 Points)
Replied 05 February 2013

If the intention of purchasing land was for carrying on real estate business i.e re-sale then it will be revenue loss, otherwise it will be capital loss

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