Capital gain exemption

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 November 2013 The assessee had a land at palsana. In the previous year, the Government had made compulsory acquisition of the land for making highway.
The assessee received the amount from the Government and thus capital gain arises.
Now to minimise the tax, the assessee is planning to purchase a flat.
My queries are: -
1. Can the assessee even purchase the flat for exemption if land had been sold? As i have read in section 54B, land is to be purchased when land is sold. Please solve my query.
2. The due date for return has gone, and the assessee wants to invest in flat now and want to claim deduction by filing belated return. My query is, can the assessee can claim exemption even if he files belated return and not deposited amount in any capital gain deposit account scheme.

I will be very helpful if any one of you will solve my query as soon as possible.

Thank you

CA Vivek R Trivedi

CA Vivek R Trivedi (Expert)

13 November 2013 whether land which is compulsory acquired is agricultural land or N.A.
If agricultural land then no capital gain as it is exempt.
so first of all confirm that

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

13 November 2013 1. Palsana is an agriculture belt and in case the land acquired by the Govt is an Agriculture land, by virtue of Section 10(37) such capital gain is exempt.
2. In case the land is non agriculture, U/s 54F -Investment in Residential house can be made.
3. In case the acquisition took place prior to 01.04.2013, then .... the assessee has missed the train. He may not be benefited.
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Querist : Anonymous

Querist : Anonymous (Querist)

13 November 2013 Thank you for your response sir.
The land is a agricultural land, but the assessee has not used the land for the agriculture purpose, the assessee has build a farm house on it. So still does the income will be exempt????
Also the acquisition of land by Government was done prior to 01.04.2013, so does that mean whole of capital gain will be taxable and investment will not have any effect on tax????

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

13 November 2013 Farm House without a farm is equal to a residential house. This becomes the case when the entire land was covered under construction.
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Can it be shown as there were many chikoo and mango trees on the land and assessee used the farm house to keep watch on the trees bearing fruits.
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The only left alternative - of showing the land as an Ag. Land can save the taxes. Otherwise, the amount of capital gains will be taxable.
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Further, Date of receipt of initial compensation is more important rather than the time when the actual acquisition started. Let us tell when the amount has first been received.
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