Capital Gain

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My Client being an  Individual having a resedential Plot taken on lease in Rajasthan since 1993. He has incurred total amount  Rs.69003/- till 30.06.19999 towards cost of acqusition & Registration charges. Then He sold this Plot in Aug,2008 for a sale consideration of Rs.7,00,000/- through cash. Concurrently He purchased another Resedintial Plot in Ahmedabad on 16.10.2008. The Purchase consideration for the same is Rs.700,000/-

Now My question is whether he can claim long term capital gain to be  exempt u/s 54 of I.T.Act as the entire capital gain is invested in another resedential Plot within the prescribed time.

Regards.

Sanjay Baheti

Replies (6)

 

U will hav to compute the indexed cost of acquisition of the plot......and u can claim deduction of Rs. 700000/- from the net amt (i.e Sale consideration less indexed cost of acquisition) u/s 54 and the remaining LTCG if +ve, is taxable!!!

54 - Transfer of Res. house and Pur or construction of Res. house.........

In ur case.. considering Res. house is sold at normal value......I dont think - CG will arise since you have invested the entire Sale proceeds........

One thing Cost of Res. house sold is important....Sec 50 C will apply.....MV or sale consideration whichever is higher....

 

Sanjay Sir,

 

sec 54 speaks of a residential house, not a residential "plot". 

There being a house on the plot is paramount for the tax benefit.

 

However, the CBDT has clarified by a circular the cost of land also qualifies for deduction u/s 54 and 54F

Circular No. 667, dated 18-10-1993

click for reference....

 

Nonetheless, I think u meant residential house only, so agree with Balaji.. there may not be capital gain to worry about avoiding...

Dear G.K. bhai.....

At first instance, i also thought that it is a Plot but then realised that it is Res. house........

only purchase of residensial plot is not enough, construction should also complete within 3 yrs.

Correct me if i am wrong.........

Yes saurabh brother, u r absolutely right........


CCI Pro

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