01 July 2016
A client of mine who is about 70 years old and a widower,living alone as two of his daughters are married and living abroad, sold his apartment in panaji Goa for Rs.45,00,000/- .in Nov 2015. He paid Rs. 1,32,000/- as commission to agent for sale. Rs.12,000/- as legal fees.He had purchased the same for Rs. 9,82,500/- in feb 2003.Plus Rs.25,112/- for basic interior works. He further paid Rs.40,000/- as price for car parking.,He did some improvements in 2004 amounting to Rs.1,50,000/-.
The sales proceeds were invested like this. R.14,00,000/- in REC Bonds. Rs.6,00,000/- in ICICI Prudential Mutual Funds Tax Saving dividend income fund. Further, as he was alone and no one to take care, He joined an elderly living and care centre which is a paid centre in bangalore. The place provided him a fully furnished single occupancy Room with attached toilet and bathroom and a kitchen platform on a rent of Rs 35,000/-(Rs 14,000 Rent + Rs.21,000 Service fee which includes food cleaning. There is a ten year long Lease for this facility and a Refundable deposit of Rs 17,50,000/- + Non-Refundable deposit of & Rs 7,50,000/- is deposited With Mantri Group offering this facility.He has a Pension income of Rs.2,50,000/- and interest income of Rs.16,000/-. How to treat the LTCG as the entire sales proceed is invested as mentioned above? As per calculation of cost of indexation his capital gain is approximately Rs.11,00,000/-.
02 July 2016
Dear Sushrutha,
No LTCG shall arise since if the capital gain is Rs 11lac approx and his investment in rec bond is Rs 13lac. Kindly refer sec 54EC for further clarifications.
CAclubindia
