Capital gains from property

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PRANAY JAIN (Querist)

02 August 2014 I have received a sum by selling a property I want to invest it in residential house to avoid capital gains tax but the investment would be made after 4-5 months, so in that period can I use that money in my business?

CA SUNIL K GARG

CA SUNIL K GARG (Expert)

02 August 2014 yes sir, as per section 54 (1) the new asset has to be purchase either one year before or two years after the date on which transfer took place or has within a period of three years after that date costructed a house

or has deposited the sum in capital gain account scheme before furnishing the return of income under sec 139
it means u can tilize the sum and before furnishing the return either u have to purchase new house or dep[osite in capital gain account scheme.

but pls keep in mind if u want to take deduction under sec 54 EC i.e by investing in certain bonds then the investment should be withib six months from the date of transfer

PRANAY JAIN

PRANAY JAIN (Querist)

02 August 2014 That means if I receive a sum in Aug-14 then i can use it till Sep15, and before submitting my return either I have to invest the amount or keep it in capital gain scheme account.

CA SUNIL K GARG

CA SUNIL K GARG (Expert)

02 August 2014 if the due date is 31 july than up to july or 30 sept , which is applicable

PRANAY JAIN

PRANAY JAIN (Querist)

02 August 2014 One more query, if I already has one house in my name then can I take benefit of Capital gain exemption by investing in residential house.(As per amendment in union budget 2014)

CA SUNIL K GARG

CA SUNIL K GARG (Expert)

04 August 2014 dear pranay,
i think u r getting confused between section 54 and 54 f. precondition to sec 54 F is that the assesee should not on more than one house on the date of transfer of original assets. however there is no such condition in section 54 . it means if u sell a residential house , and invest in new residentail house , u will get the deduction u/s 54 (1), even if u own more than one house.

regarding the amendment by finance act 2014, earlier in section 54 (1) , the word used was was "a' residential house . the interpretation of a was taken as any or in plural terms. it was not clear , whether the word "a" has been used in singular or plural terms. to clear the ambiguity , the act has now clarified that one residential house is to be purchased.
there is one more amendment in sec 54, now the new house has to situated in India only, earlier the investment in house situated in foreign were also eligible for deduction u/s 54

PRANAY JAIN

PRANAY JAIN (Querist)

05 August 2014 Sir,
I am asking about section 54f as the capital gain is from non residential property.I own one residential house at the time of sale of above non residential property,so would changes in 2014 budget have any ramifications if I want to buy another residential house to offset that capital gain?

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