Capital Gain
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 June 2011
I have purchased a flat in May 2009 which was under construction, registration of Agreement is in May 2009, possession of flat on final payment was on September 2010.
I now have sold a flat purchased in 2005, Sales Agreement date is May 2011,
Can I claim Capital Gain exemption
Query
a) Whether Date of possession will be considered for capital gain (so that flat purchaed 1 year prior to sale can be considered)
b) how to save capital gain tax
I now have sold a flat purchased in 2005, Sales Agreement date is May 2011,
Can I claim Capital Gain exemption
Query
a) Whether Date of possession will be considered for capital gain (so that flat purchaed 1 year prior to sale can be considered)
b) how to save capital gain tax
CA MANOJ GUPTA
(Expert)
13 June 2011
THE JUDICIAL OPINION IS NOT IN UR FAVOUR
In the case of M. Syamala Rao v. CIT (1998) 234 ITR 140 (AP) it was held that registration of a document related back to the day on which the agreement of sale was executed, hence, when the builder executed the agreement of sale on 7-8-1993, the assessee was to be deemed to be owner of property from that date and, accordingly, the capital gain was to be worked out.
In Smt. Lata G. Rohra v. Dy. CIT (2008) 22 (II) ITCL 250 (Mum ‘A’-Trib) : (2008) 21 SOT 541 (Mum-Trib) the assessee had entered into an unregistered agreement with developer on 7-8-1993 for acquiring a flat which was constructed in the year 1997 and was registered in the year 1998.tHE ITAT HELD THAT the asset was held by the assessee from 7-8-1993 because when the assessee sold the house property, it did not sell the same without any legal rights of the assessee as an owner thereof, and unless the rights of ownership are transferred, there cannot be any sale and, therefore, there was no merit in the contention of the assessee regarding right being intangible asset and house property being a physical asset. Therefore, the assessee was entitled for indexation on the value of asset, i.e., total purchase consideration payable for the property and not on the basis of date actual payment made by the assessee. Hence, indexation had to be done from the first year in which asset was held, i.e., from 1993 in this case.
U CAN GO FOR SECTION 54EC BONDS TO SAVE CAP GAIN TAX
CA MANOJ GUPTA
JODHPUR
09828510543
In the case of M. Syamala Rao v. CIT (1998) 234 ITR 140 (AP) it was held that registration of a document related back to the day on which the agreement of sale was executed, hence, when the builder executed the agreement of sale on 7-8-1993, the assessee was to be deemed to be owner of property from that date and, accordingly, the capital gain was to be worked out.
In Smt. Lata G. Rohra v. Dy. CIT (2008) 22 (II) ITCL 250 (Mum ‘A’-Trib) : (2008) 21 SOT 541 (Mum-Trib) the assessee had entered into an unregistered agreement with developer on 7-8-1993 for acquiring a flat which was constructed in the year 1997 and was registered in the year 1998.tHE ITAT HELD THAT the asset was held by the assessee from 7-8-1993 because when the assessee sold the house property, it did not sell the same without any legal rights of the assessee as an owner thereof, and unless the rights of ownership are transferred, there cannot be any sale and, therefore, there was no merit in the contention of the assessee regarding right being intangible asset and house property being a physical asset. Therefore, the assessee was entitled for indexation on the value of asset, i.e., total purchase consideration payable for the property and not on the basis of date actual payment made by the assessee. Hence, indexation had to be done from the first year in which asset was held, i.e., from 1993 in this case.
U CAN GO FOR SECTION 54EC BONDS TO SAVE CAP GAIN TAX
CA MANOJ GUPTA
JODHPUR
09828510543
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