PERIOD OF HOLDING

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This query is : Resolved

GAURAV PARASHAR (Querist)

15 March 2011 PLS TELL ME HOW CAN I CALCULATE PERIOD OF HOLDING FOR RESIDENTIAL HOUSE PROPERTY?
where the land was acquired on and for more then 3 YEAR BUT CONSTRUCTION ON THAT LAND OF RESIDENTIAL HOUSE PROPERTY GOES OF ONLY FOR 1.5 YEARS

NOW IF I SOLD THAT PROPERTY WILL IT ATTRACT LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN

can i claim exemption under section 54 or i have to move to 54f

also pls tell me how i can prove the above property as residential house property bein long term capital asset?

or tell me any other tax planning to avoid tax

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

15 March 2011 You should opt for Section 54F rather than Section 54 for getting exemption of LTCG.

Even though the property is being sold in the form of house but for the assessee it is land which is Long Term capital Asset and the construction work can be treated as cost of its improvement.

In such a case , you may enter into an agreement specifying separate consideration for land and construction work, if possible.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

17 March 2011 Land may be treated as Long term asset and building as short term asset and calculate Capital gains accordingly. Madras High Court decision in Dr. Ramachandra Rao's case may be referred to.

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