Reinvestment of capital gain
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 November 2011
please someone explain me about my query.
1. Assessee had earned LTCG on sale of house property-A in the FY 2009-10.
2. Assessee had invested total LTCG in a new house Property-B in FY 2010-11.
3. Now Assessee want to sell House Property-B in FY 2011-12 and with this want to purchase another House Property-C in the same time.
Is this possible as Income Tax provisions says that You should not sell the new house Property-B within a period of three years from the date of purchase.
1. Assessee had earned LTCG on sale of house property-A in the FY 2009-10.
2. Assessee had invested total LTCG in a new house Property-B in FY 2010-11.
3. Now Assessee want to sell House Property-B in FY 2011-12 and with this want to purchase another House Property-C in the same time.
Is this possible as Income Tax provisions says that You should not sell the new house Property-B within a period of three years from the date of purchase.
CA PARAS BAFNA
(Expert)
12 November 2011
Suppose against capital Gains of Rs 8.00Lac , the new residential house property has been purchased for Rs. 10.50 Lacs.
Capital Gain exemption enjoyed is Rs 8Lacs.
.
When before 3 years of its purchase in case the new asset is sold , Cost of acquisition of the new asset is, even though, Rs 10.50 lacs, but section 54(1)(i) states that the cost of acquisition of this new asset will be reduced by the exemption claimed i.e. Rs 8.00 lacs.
.
So if Sales Consideration of the new asset is say 12.50 Lacs, for computing capital gains we have to deduct Cost of Acquisition (10.50-8.00=2.50) lacs.
.
The resulting CG will be 12.50-2.50=10.00lacs.which arises on transfer of a short capital asset.
.
Against STCG no exemption is allowable.
Capital Gain exemption enjoyed is Rs 8Lacs.
.
When before 3 years of its purchase in case the new asset is sold , Cost of acquisition of the new asset is, even though, Rs 10.50 lacs, but section 54(1)(i) states that the cost of acquisition of this new asset will be reduced by the exemption claimed i.e. Rs 8.00 lacs.
.
So if Sales Consideration of the new asset is say 12.50 Lacs, for computing capital gains we have to deduct Cost of Acquisition (10.50-8.00=2.50) lacs.
.
The resulting CG will be 12.50-2.50=10.00lacs.which arises on transfer of a short capital asset.
.
Against STCG no exemption is allowable.
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