Capital gain

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CA Ashwani Agarwal (Querist)
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03 March 2014 An assessee gave a Land as his capital in a Partnership firm.
It was a long term asset on which Capital Gain is levied at the value on which it is transferred to the partnership.

My question is whether the assessee can claim exemption u/s 54? If yes, than what are time limit of investment as the assesse has not received any amount from the Partnership.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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03 March 2014 1. Since land has been transferred the assessee can avail exemption u/s 54F if he invests the SALE PROCEEDS in a residential house property.

The time limits for investment are as under:

Purchase - 1 year BEFORE or 2 years AFTER the date of transfer

Construction - 3 years AFTER the date of transfer

However, if the amount is NOT invested on or before the due date of filing the income tax return, then the sale proceeds have to be deposited in a capital gain scheme.

2. The fact that the assessee has NOT received any amount from the firm makes no difference since capital gain arises on transfer (accrual basis).

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