Capital gain

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This query is : Resolved

CA Tejas Andharia (Querist)

16 June 2013 Pls asnwer these 3 queries with reference to relevant section of the act or case law

1. To get benefit of deduction of section 54F, can we first purchase the land and then construct the house? Shall we get both amounts as deduction?

2. In case of section 54B deduction, shall we get benefit of deduction when we purchase another agriculture land after making Agreement/Satakhat of agriculture land to be sold? That means we have purchased new agriculture land after making Agreement/Satakhat of old agriculture land but before making final sales deed of old agriculture land?

3. If we (seller) cancel agreement to sale land and pay compensation to proposed buyer then amount of that compensation can be added to our cost of acquisition or cost of improvement?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

16 June 2013 Q1. Under Section 54F for claiming the exemption land purchased after transfer of the original asset can be included with the construction costs incurred.
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CA PARAS BAFNA

CA PARAS BAFNA (Expert)

16 June 2013 Q.2. The possession of property is generally not being given through Satakhat as it is treated merely an agreement to sale.
Transfer takes place when the sale deed is entered.
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So in my opinion, on the basis of facts 54B will not provide any benefit in such circumstances where new Agri. land has been purchased before transferring the old Land.
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CA PARAS BAFNA

CA PARAS BAFNA (Expert)

16 June 2013 Q 3. The property has already been acquired by the holder, so any amount paid on cancellation of a sale agreement of the property in question can not be said as forming the part of its cost of acquisition.
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Further, there seems to be no improvement in the utility or status of the Capital asset by incurring such an amount, so it can not further be said as cost of improvement.
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SO in my view, the expenditure so incurred can not be added to the cost of asset.
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