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Buying car for office use from Ltcg

Maninder Singh (17 Points)

07 September 2022

can i claim deduction if I purchase car for my office use from ltcg.

thank you

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18 Replies

sabyasachi mukherjee (27748 Points)
Replied 07 September 2022

You can claim deduction under a different head profits and gains from business and Profession.

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Maninder Singh (17 Points)
Replied 07 September 2022

Plz elaborate

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193990 Points)
Replied 07 September 2022

Purchase of Car is not eligible for any exemption against LTCG....

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Goutham Babu P V (44 Points)
Replied 07 September 2022

Dhirajlal rambhia sir

Respected sir,
My query is as follows

One Mr. Kiran claimed capital gain tax exemption in the year 21-22, and subsequently gifted the new asset purchased (based on which capital gain tax exemption is claimed) to his wife in the month of September 2022 . Now he wants to know whether claimed exemption will be reversed/effected by this gift deed

Events date wise

Sale of old house : 05.10.2021
Purchase of new house : 18.07.2022
ITR filed within due date : 31.07.2022 and claimed capital gain tax exemption
Gift of new house to wife: 01.09.2022

Thanks and Regards
Goutham Babu P V
Advocate

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193990 Points)
Replied 08 September 2022

Yes, it will be reversed as Short term capital gain in the AY 2023-24.

For your perusal read ITD tutorial "16. exemption under 54" .... page 6 onwards... (Unable to attach the file here)..

Some extract follows....

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193990 Points)
Replied 08 September 2022

Consequences if the new house is transferred
Exemption under section 54 is available in respect of rollover of capital gains arising on transfer of residential house into another residential house. However, to keep a check on misutilisation of this benefit, a restriction is inserted in section 54. The restriction is in the form of prohibition of sale of the new house.
If a taxpayer purchases/constructs a house and claims exemption under section 54 and then transfers the new house within a period of 3 years from the date of its acquisition/completion of construction, then the benefit granted under section 54 will be withdrawn. The ultimate impact of the restriction is as follows:
The restriction will be attracted, if after claiming exemption under section 54, the new house is sold before a period of 3 years from the date of its purchase/completion of construction.
If the new house is sold before a period of 3 years from the date of its purchase/completion of construction, then at the time of computation of capital gain arising on transfer of the new house, the amount of capital gain claimed as exempt under section 54 will be deducted from the cost of acquisition of the new house.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193990 Points)
Replied 08 September 2022

Though some intellectual professionals treated that being GIFT, the transfer price being zero, so STCG is nil and tried to escape the STCG; but there is a catch now.

As of now, ITD treats transfer price as higher of sell price or STAMP DUTY value !!!

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Goutham Babu P V (44 Points)
Replied 08 September 2022

Sir o didn't understand can u please send me your contact details

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193990 Points)
Replied 08 September 2022

No need to dig deeper..... In short, the LTCG claimed in purchase of new HP will get reversed in AY 2023-24, when the house is gifted to wife within 1 month of purchase..

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Goutham Babu P V (44 Points)
Replied 08 September 2022

Is gift amounts to transfer sir ? what about section 47(3) of the IT Act ?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193990 Points)
Replied 08 September 2022

Though it is disputable, but sec. 47(iii) works with sec. 45 for calculation of capital gain over GIFT.

Here sec. 54 overrides it and Transfer as per sec. 2(47)(ii) would be considered for any reversal of exemption claimed earlier.

Need to search for any case law favoring assessee in such case.

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Goutham Babu P V (44 Points)
Replied 08 September 2022

Have u got any case law against to the assessee sir ? now doubt is how do they compute capital gain for a gift deed when the consideration is nil resulting in capital loss , where have they mentioned that section 54 overrides other provisions sir ?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193990 Points)
Replied 08 September 2022

The same thing I tried to explain earlier but you didn't...........

In general sec 54 do not override except in particular case, when the specific condition was laid down when the exemption claimed.

For computation of capital gain over Gift sec. 47(III) suggest exemption, so it it never taxed.

For case laws in your favor you may google it...

Goutham Babu P V (44 Points)
Replied 08 September 2022

So consideration is must to compute the capital gain right ? in the absence of the consideration in gift deed how do they compute it ? for example
sale consideration - 0000
cost of acquisition - 0100
taxable capital gain -100 now u mean to say they consider stamp duty value of the property to be considered as sale consideration received?