Capital gain account scheme,1988

Tax queries 473 views 3 replies

CA Suraj Prasad Shaw

Chartered Accountant

504 Points Joined June 2009

A woman assessee has sold her house and deposited the amount of capital gain of Rs.30,00,000/- in capital gain account scheme, 1988 with a nationalized Bank.

Now she wants to buys a residential flat in joint name with her son.

The Cost of new house is Rs.60,00,000/-. The amount of deposit will be utilized for purchasing the said flat.

However balance amount of cost will be financed through loan from some other bank.

The loan of balance Rs.30,00,000/- will disbursed in the name of her son and name of the son will also be mentioned as first owner in the sale agreement of new flat.

Now whether the amount of deposit of Rs. 30,00,000/- utilized for purchase of new flat will chargeable to tax since name of mother is not mentioned as first buyer/owner in the sale agreement.

Expert Please guide on the above issue.

Since the bank with which the amount is deposited as per capital account scheme is not allowing to withdraw the same deposit and arguing that the said amount will be chargeable to tax.

Please do the needful by providing me a related case laws if possible.

Replies (3)

Mihir

Wealth Manager

5293 Points Joined December 2008

I think she should be able to get exemption. It should not matter whether she is the second owner. What is the difference between first owner second owner and co-owner? Her ownership is not diluted if her name happens to come second in the agreement. She and her son are both co-owners. I do not have any case laws for this purpose, though. Let others reply.

CA Bhargav Nathwani

CA in Practice

8307 Points Joined August 2012

Not sure..but contract must contain clause of % of holding of all the holders..so tax should be exempt of 2nd holder's portion of holding..in present case she should hold 50% holding then exemption may given..ifm totly wrong then pls informe me in msg..thanks

CA Suraj Prasad Shaw

Chartered Accountant

504 Points Joined June 2009

Originally posted by : Suraj Prasad Shaw
	A woman assessee has sold her house and deposited the amount of capital gain of Rs.30,00,000/- in capital gain account scheme, 1988 with a nationalized Bank. Now she wants to buys a residential flat in joint name with her son. The Cost of new house is Rs.60,00,000/-. The amount of deposit will be utilized for purchasing the said flat. However balance amount of cost will be financed through loan from some other bank. The loan of balance Rs.30,00,000/- will disbursed in the name of her son and name of the son will also be mentioned as first owner in the sale agreement of new flat. Now whether the amount of deposit of Rs. 30,00,000/- utilized for purchase of new flat will chargeable to tax since name of mother is not mentioned as first buyer/owner in the sale agreement. Expert Please guide on the above issue. Since the bank with which the amount is deposited as per capital account scheme is not allowing to withdraw the same deposit and arguing that the said amount will be chargeable to tax. Please do the needful by providing me a related case laws if possible.