Capital gain

Save Share

This query is : Resolved

Quick Summary

This discussion addresses capital gains tax implications for selling a restaurant business and its tenancy rights for £2,000,000 in 2020, acquired in 1996 for £50,000. It explores the eligibility for investing in 54EC capital gains bonds, noting that while tenancy rights of land and buildings are generally applicable, the allocation of the sale proceeds between the business and tenancy rights needs careful consideration. The advice suggests the seller should determine a reasonable amount for the tenancy transfer to invest in 54EC bonds, paying capital gains tax on the remainder.

Sam

Sam (Querist)
Follow

09 January 2021 I have sold my restaurant business along with the tenancy right for 2000000 in 2020. I have acquired the business in the year 1996 for 50000 . What are the tax implications, capital gain tax etc. Can I apply for 54ec capital gain bonds ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

09 January 2021 Yes, you can invest the capital gains in 54EC bonds.

Sam

Sam (Querist)
Follow

09 January 2021 But the deduction u/s 54EC is restricted to only transfer of Land or building or both by Finance Act 2018 ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

10 January 2021 Tenancy right of land and building portion 54EC applicable.

Sam

Sam (Querist)
Follow

10 January 2021 i have received the amount for transferring tenancy right and business sale jointly. So how will the capital gain be calculated.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

10 January 2021 Decide based on prevalent market conditions.

Sam

Sam (Querist)
Follow

10 January 2021 Sorry I am not understanding ?
please explain .

Sam

Sam (Querist)
Follow

13 January 2021 As I have received the amount jointly for business sale and transferring tenancy right,there is no division of money mentioned in the agreement. Can I invest the full amount in 54 ec capital gain bonds ?
Please help me understand sir .

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

13 January 2021 You are the best judge decide the amount towards tenancy transfer and deposit in 54EC bonds for the balance pay capital gains tax. No body will question the amount.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now