Sec.54 exemption...Urgent Sir!!

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Rajesh (Querist)

02 September 2010 Dear Experts,
Urgent Sir!!!
We have a case involving Sec.54. The facts of the case are
For the A.Y.2008-09 assessee sold a house property (herein after called HP 1) and bought another house property (herein after called HP 2) in the same asst. yr.
Now the assessee wants to sell the HP 2 and wants to buy another house property (herein after called HP 3) which has to be brought to books in AY 2011-12.
Now my question is if the HP 2 sold in less than 3 years means then STCG will be applicable.
This STCG arises from the Asst. Year 2011-12 or 2008-09. In other words should i have to calculated the tax amount for this STCG right from 2008-09 or is it sufficient if i calculate from the 2011-12 itself.
Kindly help me on this issue.
With regards,
Rajesh.

SANJAY TALATI

SANJAY TALATI (Expert)

02 September 2010 Sec. 45(1) provides that Capital Gain arising from the transfer of capital asset during P.Y. is chargeable to tax in the immediately following A.Y. , if it is not eligible for exemption u/s 54, 54B,54D, 54EC, 54F , 54G and 54GA.

There are certain situations/cases in which capital gain is taxable in a year other than the year in which the capital asset is trfd.
These are :

(1)Computation of the Capital Gain in case of conversion of the capital asset into stock in trade (Sec. 45(2).
(2) Computation of the capital Gain on the transfer of firm's asset to partners and vice versa. (45(3)(4).

The taxability of the CG does not depend on which year the Asset is brought in your books. Your case is not falling in any of the exceptions narrated above. Hence, it will be taxable in the year of transfer.

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