CAPITAL GAIN

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Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2011 Hi There,

I had purchased an agricultural land in 1983.

The land was sold in F.Y. 2010-2011 for Rs. 70 lacs.

The land falls within 8 km of the nearest Municipality. Hence it is a "Capital Asset" and attracts Capital Gain Tax.

Since the indexed purchase cost is very
negligibe, almost the entire sale
consideration is the Long Term capital Gain.

I am about to purchase a residential property for Rs. 50 lacs to avail exemption u/s 54F.

For the F.Y. 2010-11 (A.Y. 2011-12) I will invest in C.G. Deposit Scheme for availing exemption u/s 54F in future.

For the balance Gain part (Rs. 70- Rs. 50) = Rs. 20 lacs I want to invest in agricultural land to avail exemption u/s 54B.

Kindly suggest if my contention of availing both the exemtion is correct.

Should I purchase the agricultural land outside the limit of 8 km of the nearest municipality or can i purchase any agricultural land?

Thanks in advance.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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18 July 2011 First of all the land sold is in rural area, means out of 8Km from Municipal limits, then it will be a rural land , then it is not a capital asset and as such you will be not liable for any capital gains or income tax.

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In case it is a urban land then only LTCG will arise.
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If you purchase a residential house claim deduction U/s 54F and not in 54.

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You may purchase agriculture land for Section 54B deduction at any where in India, irrespective of its being rural or urban.

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2011 thanks a lot sir!!

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