15 October 2013
Respected Sirs, MY QUESTIONS ARE 1)Can an assesse treat his ancestral property received in family partition as either his huf property or his individual property as per his desire and as per better tax planning? AND VISA VERSA. 2) Can he change the treatment later? If Yes How?
16 October 2013
Dear Ajay Sir, I am a lay assesse who has a few genuine queries in his mind and who wants useful and correct answers to his queries before taxfiling.With great respect I humbly submit that providing a link to a web article is not an answer which an expert is expected to give on this online forum.Its like saying that go do a diploma in taxation and help yourself. I request you to answer my specific query which I repeat as follows. I have sold two ancestral residential properties and quoted my individual pan no in the registered sale deeds in FY 2012-13. MY QUESTIONS ARE 1)DO I NOW HAVE A CHOICE TO SHOW BOTH OR ONE OF THE SALES IN MY I.T. RETURNS/BALANCESHEET OF MY HUF? I HAVE ALREADY UTILISED THE COMBINED LONG TERM CAPITAL GAINS FROM BOTH THE ANCESTRAL PROPERTIES IN PURCHASE OF A RES. FLAT IN MY NAME IN FY 2012-13. IT IS URGENT PLEASE REPLY SOON
01 August 2024
Given your situation, here’s a detailed breakdown of how you should handle the sale of ancestral properties for tax purposes:
### **Understanding the Tax Implications:**
1. **Ownership and Sale Details**: - **Individual PAN**: Since you used your individual PAN in the registered sale deeds and the sale proceeds were credited to your individual account, the sale transactions are associated with you as an individual.
2. **HUF vs. Individual Reporting**: - **Individual Capacity**: Since the sales were executed in your name and you received the proceeds in your account, the capital gains from these sales should be reported under your individual tax returns. - **HUF Reporting**: For the HUF to report the capital gains, the property should have been owned by the HUF, and the sale should have been in the name of the HUF. Since the sale deeds and proceeds are linked to your individual PAN, the HUF cannot claim the capital gains.
### **Key Points Regarding Your Queries:**
1. **Choice of Reporting**: - **You Cannot Report Under HUF**: Given that the properties were sold in your name (individual) and not in the name of the HUF, you cannot report these sales or the resulting capital gains in the HUF’s balance sheet or income tax return. - **Individual Reporting**: You should report the capital gains from the sale of both properties in your individual Income Tax Returns (ITR) for FY 2012-13.
2. **Utilization of Long-Term Capital Gains**: - **Purchase of Residential Flat**: You mentioned that you have utilized the capital gains for purchasing a residential flat. This is allowable under Section 54 of the Income Tax Act, which provides exemption for long-term capital gains if the amount is invested in a residential property. - **Documentation**: Ensure that you have all the necessary documentation to prove that the capital gains were utilized for purchasing the residential flat, including sale deeds, purchase agreements, and bank statements.
### **Action Steps:**
1. **File Individual ITR**: - Report the capital gains from both ancestral properties in your individual ITR. You can claim exemptions under Section 54 if you have invested the gains in a residential property.
2. **No HUF Reporting**: - Do not attempt to report these transactions in the HUF’s balance sheet or tax return, as it is not applicable in this case.
3. **Consult a Tax Professional**: - If you have any further doubts or require detailed assistance, consulting a tax professional or advisor is advisable. They can provide personalized guidance based on your specific circumstances and ensure compliance with tax regulations.
### **Conclusion:**
Since the sales were in your name and the proceeds were credited to your individual account, the capital gains must be reported in your individual tax returns. You cannot report them under the HUF. Ensure that you have utilized the capital gains in accordance with the tax laws and keep all relevant documents for reference.
CAclubindia
