LT Gains

This query is : Resolved

Velu (Querist)
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22 January 2010 A person derived LT Capital Gain Rs.2.00 Cr. Out of this he has invested Rs.1.00 Cr. for buying a dilapidated old house property. Since this is in dilapidated condition building was demolished and new construction was put up for Rs.1.00 Cr. Thus total investment equals the LT Capital Gain. Can we say there is no taxable capital gain.

Or can it be said that demolition and construction is second event after purchase of the property. The investment of Rs.1.00 Cr. for purchase alone shall be taken for deduction from Capital Gain.

Please offer your comments.

CA. VIKAS GUPTA

CA. VIKAS GUPTA (Expert)
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22 January 2010 Hi,
i think that your second opinion that the demolition and construction is second event and Rs.1.00 Cr. should only be taken for calculation of exemption is more evident.

CA Amit Kumar Hallen

CA Amit Kumar Hallen (Expert)
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22 January 2010 Mr. Velu,
First of all i hope that the capital gain is not from sale of shares which carry STT also. The Income tax Act says that you have to purchase a ready property within two years or construct within three year from the date of sale. Further you can also purchase one year earlier from the date of sale. Here there are two separate thing one purchase of property and second construction. Therefore only one event is allowed thats too within the stipulated period.

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