Exemption from long term capital gains tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 July 2011 one of my client has sold his house property in may 2011, and is in receipt of long term capital gain.
Now pl. can any one clarify me on the following;

1. Can he reinvest in more then one house property?
2. What are the other exemptions available?
3 What is the time frame?
And said client has given the power of attorney and received the entire sum by cheq. and handed over the possession to the buyer, hence I construed as sale, is it correct?

Pl clarify

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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16 July 2011 If you are selling a house property and reinvesting in a HP then Section 54 is appliable.

1. Exemption will be available for only 1 house property as Section 54 says " A house property." (Please wait for more comments on this)

2. You can claim exemption u/s 54EC also by investing in NHB and REC Bonds.

3. You can purchase the new HP(sec 54) either 1 year before or 2 years after the date of sale.
You can invest in the Bonds( Sec 54EC)within a period of six months.

Definition of ‘transfer’ in section 2(47) is an inclusive one and does not exclude the contextual or the ordinary meaning of the word ‘transfer'. There are different shades of meaning of the word ‘transfer’, viz, ‘to make over possession of to another'.

So as the possession is now in the hands of the buyer it will be considered as a transfer.

Querist : Anonymous

Querist : Anonymous (Querist)

17 July 2011 Thank you very much for your clarifications, now what is the lock in period for the bonds u/s 54EC?

And is there any capital gains deposit schemes in the bank?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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18 July 2011 I agree with the expert the lock in period is 3 years. The lock in period for purchase of new house is also 3 years if you sale the new house before 3 years then the short term capital gains shall be applicable.