Ltcg

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 March 2012 The assesee has LTCG of Rs 1 crore on sale of a residential house, say, in June 2012. He has already purchased a new house in March 2012 for Rs 55 lakhs.Thus he has utilised part of capital gain and balance is Rs 45 lakhs on which he can pay tax @ 20% or may invest further in improvement of the new house by additional construction within next 3 years,i.e. by June 2015. If he chooses this option he will have to deposit Rs 45 lakhs in Capital Gain Scheme before due date of filing the Return. Due date is 31 July 2013 as capital gain arises in previous year 2012-13.
However as per sec 139(4) due date can be extended till 31 March 2015 (One year after the close of relevant Assessment year,which is 2013-14.(The Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Miss Jagriti (supra) has held that sub-section (4) of section 139 provides the extension period of limitation as an exception to sub-sec. (1) of sec. 139 of the Act. Sub-sec. (4) was in relation to the time allowed to an assessee under sub-sec. (1) to file the return. Therefore, such provision was not an independent provision, but relates to the time contemplated under sub-sec.(1) of sec. 139. Therefore, sub sec.(4) has to be read along with sub-sec.(1). Therefore, the due date for furnishing the return of income u/s 139 (1) of the Act was subject to extended period provided u/s 139 (4) of the Act.)
My queries are:
1.When does the capital gain should be reported in IT Return - For a.y 2013-14 or 2015-16 i.e after 3 years of capital gain arisen and period given in sec 54 is over?
2.Can deposit in capital gain scheme be made till 31 March 2015 or only by 31 July 2013?
3. When is tax to be computed and paid - in the year when capital gain has arisen i.e 2012-13 as advance tax for a.y. 2013-14 or after 31 July 2013 or soon after 31 March 2015?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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29 March 2012 1. Capital gain is taxable in the year in which the asset is transferred.

Accordingly capital gain has to be declared in AY 13-14, notwithstanding the fact that the same may be exempt.

You have to show the capital gain and then claim exemption.

2. The due date for depositing the amount is 31st July, 2013.

3. If you deposit the amount by 31st July, 2013, the capital gain shall be exempt otherwise the same shall be taxable.

4. If you deposit the amount by 31st July, 2013 but do not utilise the amount by June 2015, then the capital gain exempt earlier shall be taxable in AY 16-17.

Querist : Anonymous

Querist : Anonymous (Querist)

29 March 2012 Thanks for your considered opinion.
In case balance amount of capital gain, i.e. Rs 45 lakhs is not deposited in Capital gain scheme by 31 July 2013,then tax on the same i.e. Rs9 lakhs has to be paid. What is the time when it is to be paid -- by 31 July 2013 or as advance tax on 15 Sept 2012,15 Dec 2012 and 15 March 2013?
Why sec139(4) be not considered as due date for filing of IT Return, as laid down in CIT vs Miss Jagriti case quoted above?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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30 March 2012 1. If the assessee has decided that he will not deposit the amount in the capital gain scheme, The tax has to be deposited by way of advance tax on the advance tax date falling immediately after the transfer date.

2. Section 139(4) does not extend the due date. The due date is always 31st July. Section 139(4) just provides an additional time for filing the return.

As you may be aware that a return filed u/s 139(4) cannot be revised. This is so because Section 139(5) provides that a return can be filed only if the original return was filed by the due date.

If your point is accepted then a belated return should be allowed to be revised.

But it is not. Because Section 139(4) does not extend the due date. It merely provides an additional period to file the return.

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