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Whether tenancy right is capial gain or not and 54 section

VIJAY (TAX CONSULTANT) (37 Points)

15 November 2015

whether tenancy right is capitial gain of not and section 54 is applicable or not and whether we can get benifit of investmet in bonds or residential etc

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3 Replies

Ruchi (CA) (1410 Points)
Replied 16 November 2015

Yes, sale of tenancy rights is also a capital gain. But section 54 is not applicable because this section is applicable on sale of residential property itself if one is owner of the same.

Benefit under section 54EC (purchase of certain bonds) and Section 54F (purchase of residential property) is still available if it is long term in nature.

AnandKumar (Chartered Accountant) (203 Points)
Replied 17 November 2015

Tenancy Rights are no doubt capital Assets as per definition given under Section 2(14). Means Transfer of Tenency rights attrachts Capital Gain Tax.

Benefit Under Section 54EC is available on transfer of Long term Capital Asset.If resulting gain is Long term you can invest amount in certain bonds. within 6Month form the date of transfer.

Benefit Under Section 54F can also be claimed provided that NET CONSIDERATION is invested in a residential House Property.

Remeber that assessee should not own more than one house on the date of transfer. and should not purchase or construct new house within 2/3 years as the case may be.