Capital gain

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Hemangi Parekh (Querist)
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29 March 2013 kindly advice me regarding income tax implication of income generated from surrender of rights of underconstruction flat. Can it be treated as Capital Gain ? Can I claim exemption U/s.54 by investing in another underconstruction flat, agreement for which still not made till date and payment for the same started, one year before the sale of abovementioned first flat.
Thanking you

CA. PIYUSH GOEL

CA. PIYUSH GOEL (Expert)
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01 April 2013 Dear hemangi you are looking for the benefit u/s 54 but it is not the case here..

when you are surrendering your right in a under construction property, it is a case of relinquishment of right, which is covered under the definition of transfer as per sec. 2(47). right in under construction property is not a residention house property infact it is a right which is covered under the definition of caital asset u/s 2(14) that property of any kind.

therefore here capital gain provisions will attract but you can exempt you capital gain by investing funds in another residential house property u/s 54F not u/s 54. therefore you have to invest whole sale consideration received on transfer of right in the property.

also refer the judgement in the case of K.R. Srinath.

CA. PIYUSH GOEL

CA. PIYUSH GOEL (Expert)
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01 April 2013 and if it is short term gain then you cannot go for sec. 54F

Hemangi Parekh

Hemangi Parekh (Querist)
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01 April 2013 thank you for your valuable reply.

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