CAPITAL GAIN

Save Share

This query is : Resolved

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)

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.

*

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

*

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!!

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