Capital gain on sale of urban agricultural land

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 June 2013 Assessee has purchased an agricultural land in 1996-97 FY for 2 lacs and sold the same in 2012-13 FY for 80 lacs. However, stamp value of the property stood at 90 lacs this time.

now for claiming deduction u/s 54 and 54B/EC/G/GG etc. how much investment is to be made?

sale value 90,00,000
index CoA 5,50,000

Cap Gain 84,50,000

however, as the assessee has only 80 lacs with him he can only invest this amount for claiming deduction. So, whether the remaining 4,50,000 is taxable under Cap Gains??

Rupesh Jain

Rupesh Jain (Expert)
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15 June 2013 assess u/s 54B with in two year from date of tfr can purchase with gain amount

and 54EC with 6 month from tfr of assets all sale proceeds can invest

if u/s 54ec rs. 4.50 lacs not invested then capitl gain will be pay

Querist : Anonymous

Querist : Anonymous (Querist)

15 June 2013 But the assessee does not have amount more than 80 lacs with him so how will he invest 84.5 lacs??

Rupesh Jain

Rupesh Jain (Expert)
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15 June 2013 pls pay capital gain @ 20% +cess3%

CA UMESH DULAL

CA UMESH DULAL (Expert)
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15 June 2013 Though you have only 80 lacs to invest but capital gain is 84.50 lacs. you have to invest entire capital gain otherwise you will be taxed for underutilized portion of capital gain.

It seems a peculiar situation, but it is clearly written as capital gain not the consideration in the law.

Querist : Anonymous

Querist : Anonymous (Querist)

15 June 2013 One more thing....
the assessee made an agreement for purchase of tubewell on the same agricultural land for Rs. 250000.
However, at the time of sale the tubewell was sold along the land without any particular mention of such tubewell in the sale agreement.

So, would this tubewell part included as cost of improvement of the land or would be treated as a separate asset?
Because if it is taken as cost of improvement, then capital gain would be less and below Rs. 8000000

CA UMESH DULAL

CA UMESH DULAL (Expert)
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15 June 2013 If you can prove that installing a tube well had in fact appreciated the price of Ag. land you can claim as cost of improvement.

otherwise it should be treated as separate asset.

It is a matter of dispute.