Benefit of sec 54
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 August 2016
A, along with her brother and sister gives their old house to a builder, under a collaboration agreement for reconstruction in to a four floor house. The builder pays 90 lakhs to each by cheque and will also give 3 floors to A and her brother sister - one floor each. The builder bears the construction cost and will be entitled to ground floor and basement..
Cost of construction for each floor is worked out to 20 lakhs.
Thus consideration for A is Rs 90 lakhs in cash plus cost of construction 20 lakhs, i.e 110 lakhs. After deducting the indexed cost of old house (30 lakhs being A's share), the ltcg for A comes to Rs 80 lakhs
A does not invest any further amount in buying another house, as she has got one floor in the new building.
Can cost of construction Rs 20 lakhs, which was part of consideration but not received in cash,, be regarded as investment in purchase or construction in new house for getting benefit of sec 54? Will this be allowed as deduction from LTCG of 80 lakhs and A is liable to pay tax only on remaining 60 lakhs?
Cost of construction for each floor is worked out to 20 lakhs.
Thus consideration for A is Rs 90 lakhs in cash plus cost of construction 20 lakhs, i.e 110 lakhs. After deducting the indexed cost of old house (30 lakhs being A's share), the ltcg for A comes to Rs 80 lakhs
A does not invest any further amount in buying another house, as she has got one floor in the new building.
Can cost of construction Rs 20 lakhs, which was part of consideration but not received in cash,, be regarded as investment in purchase or construction in new house for getting benefit of sec 54? Will this be allowed as deduction from LTCG of 80 lakhs and A is liable to pay tax only on remaining 60 lakhs?
Amol S Joglekar
(Expert)
29 August 2016
the flat received can be claimed u/s 54.
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