Capital Gain

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CA Kamalkhaitan (Querist)
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31 May 2009 If person resident in india sells tenancy rights in tenanted house & invest money in purchasing the residential flat. He is buying the flat first time & it is in the joint name, himself & wife.what will be tax treatment?

CA.BHARAT BHUSHAN

CA.BHARAT BHUSHAN (Expert)
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31 May 2009 You are not eligible for exemption u/s 54.But, I am in doubt whether you will be taxable or not, because you Cost of acquisition can not be computed, hence no calculation of capital gain will be made...you have to made further search for that.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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31 May 2009 With effect from 1/4/1994 transfer of tenancy right attracts capital gains tax as a consequence of amendment in section 55 (2)(a) of the Income tax Act,1961. Cost of acquisition will be considered as NIL. If held for more than 36 months gain will be LTCG and accordingly exemption u/s 54 EC / 54 F can be availed.

Ca.Manish Kulkarni

Ca.Manish Kulkarni (Expert)
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01 June 2009 i agree with the view of mr B c warrier.i think u have acquired the New House and the cost of that new house should be equal or exceeds than the amount of tenancy right.In that case u have not to pay any capital Gain tax.