Tax planning regarding avoidance of ltcg on house property

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Payal Arora (Querist)
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26 February 2016 if a person has sold a house property for Rs. 40 lacs in F.Y 2015-16, cost of purchase is Rs.150000/-(F.Y 2005-06). How a person reduce his tax liability on LTCG, Except by investing in property (u/s 154/154F) & cost of improvement is not capitalize in previous years..& there is no long term capital loss.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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27 February 2016 then there is no way to save tax except for going for 54EC bond investments.

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Payal Arora

Payal Arora (Querist)
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27 February 2016 can we show cost of improvement in year 2006 if it is not capitalize in past years and no balance sheet is filed under income tax? whether the A.O can demand from us supporting documents for the same, as it is much older than 8 years?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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27 February 2016 yes. AO can ask for the documents for improvement costs.

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Payal Arora

Payal Arora (Querist)
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27 February 2016 but it is related to more than past 10 years & income tax demands to maintain books of accounts for 8 years only

Nikhil Kaushik

Nikhil Kaushik (Expert)
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27 February 2016 your house property is not a business asset and is not covered under books of accounts.

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