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Capital gain on house property

suman (Auditor ) (388 Points)

20 December 2011

ONE OF MY CLIENT HAS SALE HIS RESIDENTIAL HOUSE FOR RS. 27 LACS . THIS HOUSE WAS PURCHASED BY HIM IN 2007 FOR RS 18 LACS. AFTER SELLING THIS HOUSE IN DEC 2011 HE HAS BUY A LAND IN RS 16 LACS ,HE WILL CONSTRUCT HOUSE ON THIS LAND IN FUTURE .

WHAT WILL BE TAX LIABILITY (CAPITAL GAIN) IN RESPECT OF ABOVE MENTIONED TRANSACTION.

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13 Replies

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 20 December 2011

Suman ji,

In above case, The CG will be 5.08 Lac. (after indexation, as it is a long term property) (assumed purchased in 2006-07, as month of purchase is not mentioned)

Now, if you purchased lang worth Rs. 16 Lac then the whole of the CG will be exempt u/s 54 of the Act, because you are purchaseing a FA. U/s 54 staes purchase of buildings or lands appurtenant thereto.

Members please correct me if I'm wrong.

Z ( ) (2960 Points)
Replied 20 December 2011

Asset to be acquired is residential house property and as pointed out by Mr. Ketan Waghela , according to sec 22 house property includes building(s) and land(s) appurtenant to

So if the land qualify of being appurtenant to, then the exemption can be availed.

You have mentioned that the assesse will construct building on the land , if the money is invested in construction then such land is qualified for exemption . But do comply with the provisions. To be on safe side either start construction (though not complete it) or invest in capital gain exemption scheme

CITE: ACIT vs Narendra Mohan Uniyal (2009) 34 SOT 152(Del)

vishal (accountant) (65 Points)
Replied 20 December 2011

I have purchase a flat in navi mumbai

I have given token amount Rs. 1 Lac. in Dec. 2008.

then i have registered same falt in March 2009.

I want to sell that flat in this Dec. 2011.

What is the period of LONG TERM CAPITAL GAIN.

pls suggest me should i sold or not.

C.Balaji (Learner) (1867 Points)
Replied 20 December 2011

Suman...

Agree with Z...

As per Sec 54 - Investment should be made in Residential House Property (purchase or Construction)...

In your case, since building is to be constructed on the land, it should be constructed with 3 years and moreover the amount (capital Gains) should be invested in Capital Gains Account Scheme before the due date of filing the return...

valji (Accounts manager-MBA) (2150 Points)
Replied 20 December 2011

agreee with Z

Shyamsunder Khandelwal (Accountant) (21 Points)
Replied 21 December 2011

agree with z

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)
Replied 21 December 2011

Originally posted by : Ketan Waghela

Suman ji,

In above case, The CG will be 5.08 Lac. (after indexation, as it is a long term property) (assumed purchased in 2006-07, as month of purchase is not mentioned)

Now, if you purchased lang worth16 Lac then the whole of the CG will be exempt u/s 54 of the Act, because you are purchaseing a FA. U/s 54 staes purchase of buildings or lands appurtenant thereto.

Members please correct me if I'm wrong.

as per your explanation ...!!!

we can't claim exemption as per 54. B coz.. land is not included in that provision

New asset must be building or land appurtent thereto that building..!!!

so we can't claim 54 for purchase of land

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)
Replied 21 December 2011

Originally posted by : vishal

I have purchase a flat in navi mumbai

I have given token amount1 Lac. in Dec. 2008.

then i have registered same falt in March 2009.

I want to sell that flat in this Dec. 2011.

What is the period of LONG TERM CAPITAL GAIN.

pls suggest me should i sold or not.

Dear bro

First of all you can clearly mention financial years in questions on Income Tax provisions...!!!!

If you take money of Rs.1Lakh and possesion in 2008 (FY 2007-08)

then it must be long term capital asset as you sale it in 2011(FY 2011-12)

you are the deemed owner as per 53A of the Transfer of Property Act,1882 on 2008(FY 2007-08)

if u take possesion on such previous year

Thanks for opprutunity ...!!!!!!!!!!!!!!!

Tony John (Chartered Accountant) (6085 Points)
Replied 21 December 2011

Agree with Z

vishal (accountant) (65 Points)
Replied 21 December 2011

Originally posted by : PHANI KUMAR VANAMALA

I have Booked Flat in F.Y. 20008-09 ( Dec. 2008)

I have Registred same flat in 2008-09 ( Mar. 2009)

I got possesion in F.Y. 2011-12 . (Nov. 2011)

And finally i sold flat in F.Y. 2011-12 ( Dec. 2011)

Originally posted by : vishal

I have purchase a flat in navi mumbai

I have given token amount1 Lac. in Dec. 2008.

then i have registered same falt in March 2009.

I want to sell that flat in this Dec. 2011.

What is the period of LONG TERM CAPITAL GAIN.

pls suggest me should i sold or not.

Dear bro

First of all you can clearly mention financial years in questions on Income Tax provisions...!!!!

If you take money of Rs.1Lakh and possesion in 2008 (FY 2007-08)

then it must be long term capital asset as you sale it in 2011(FY 2011-12)

you are the deemed owner as per 53A of the Transfer of Property Act,1882 on 2008(FY 2007-08)

if u take possesion on such previous year

Thanks for opprutunity ...!!!!!!!!!!!!!!!

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 21 December 2011

Phani Kumarji,

The assessee can claim exemption.

The land that is being purchased and assessee is going to construct the house on it, the sec. states also the same, provided construction should be completed within 3 years of transfer.

Correct me if my interpretation for the sec. is wrong.

Z ( ) (2960 Points)
Replied 21 December 2011

Originally posted by : Ketan Waghela
	Phani Kumarji, The assessee can claim exemption. The land that is being purchased and assessee is going to construct the house on it, the sec. states also the same, provided construction should be completed within 3 years of transfer. Correct me if my interpretation for the sec. is wrong.