Short term capital gain on urban agriculture land

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CA Sanjay Baheti (Querist)
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29 June 2012 One of my client being an Individual as female has purchased an Agriculture Land on 20/01/2009 having 20% share in said Investment of Rs.255250/-Now this land is sold by way of Sale deed on 12/01/2012 for Rs.450000/-.

Now query is whether the short term capital gain arose on sale of the said land can be exempted u/s 54F by way of new investment in another agriculture land within a period of 2 years from the year of sale/transfer.At present no such investment is made till date.

How to be done to avoid tax impact on the said Short term capital gain.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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30 June 2012 1. Exemption u/s 54F is available only on transfer of LONG TERM CAPITAL ASSET.

Since the asset transferred is a SHORT TERM CAPITAL ASSET, the assessee CANNOT avail exemption u/s 54F.

2. However, the assessee can avail exemption u/s 54B by investing the proceeds in an agricultural land, subject to the conditions prescribed therein.

3. If investment is not made on or before the due date of filing the return, the amount must be deposited in a Capital Gain Account.

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