Section 50c and 54f

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AMIT SAXENA (Querist)
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18 January 2016 Sir,

i have case where a person sold a property for 5.lacs but stamp duty valuation is Rs. 19lacs. due to some issues with property it was sold for lesser value. now capital gain arises on 19.lacs. Assessee buy another peoperty of Rs.54 lacs by taking loan from bank. please help me how the exemption u/s 54F wil be calculated..and exemption k liye 5 lacs. invest krne h ya 19.lacs??

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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18 January 2016 Please mention the nature of the two properties -whether residential or commercial.

AMIT SAXENA

AMIT SAXENA (Querist)
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18 January 2016 property sold was commercial.. and property bought was residential..

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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18 January 2016 Recently Jaipur Bench of ITAT has held in the case of Nand Lal Sharma Vs ITO, Bundi in ITA no 413/JP/2012 that section 50C is purely a deeming fiction and does not extend beyond section 50C in absence of specific provisions. Hence the Bench ruled that for purpose of exemption u/s 54, actual sale consideration is to be taken into account and not stamp duty valuation as per section 50C. The Bench in this judgment relied upon its own earlier judgment in the case of Gyan Chand Batra Vs. ITO (2010) 233 TTJ 482 in which similar ruling was given. So as per these judgments actual sale consideration needs to be invested. For more clarity you may refer these two judgments.

AMIT SAXENA

AMIT SAXENA (Querist)
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18 January 2016 sooo if the capital gain arise after taking stamp duty valuation as a sale consideration is Rs. 15.lacs. and the actual consideration recieved 5.lacs is invested. we can take exemption of rs. 5lacs from 15 lacs. right??

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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18 January 2016 1. For getting full exemption U/s 54F that person has to invest the amount equal to or more than net sales consideration received from sale of such commercial property.
2. If he has sold the property in 19 lac (50C), he can avail a loan for buying a residential property and can claim full exemption U/s 54F. Investment made by availing loan will not disqualify the assessee for the exemption.
3. Compute the capital gains in the normal prescribed manner considering the stamp duty valuation as sales consideration and indeing cost of acquisition.
4. Claim Exemption U/s 54F of the full amount of capital gain. Show the investment in the new residential property where ever required.
.

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