Capital gain tax

Dear Sir,

My friend has purchse one flat in his wife name in 2001 He is still staying in that flat. He has another flat purchased in 1990 @ 1 Lac with his name and sold that flat @ 75 Lac. Our query is

1. Can he purchase two difference flat in his name for saving of Capital Gain Tax.?

2. Can he purchase land for that amount and save capital Gain Tax ?

3. Can he purchase flat in their family member name i.e mother, father,wife,son etc. and save on capital gain tax ?

4 Can he purchase flat for @ 50 Lac and balance amount will be use for taken Bond for saving capital Gain Tax ?

5. Can he purchase flat for @ 50 Lac and balance amount will be use for upgradtion of that flat like furnishing etc. ?

What are other options available to save capital gain tax. ?

Please clearify my friends doubt. If possible please give answer point wise.

Regards

Devendra

1. Can he purchase two difference flat in his name for saving of Capital Gain Tax.?

It depends on the facts of the case

If all those residential units can be modified to unite and make it a single residential house property then assesse can claim ecemption having regards to decision made in (CIT v D. Ananda Basappa ( 2009 ) 20 DTR 266 (Kar)).

However if the house properties are scattered and can not be united then the exemption will be available to only one house property unit.

Cite: ITO Vs. Ms. Sushila M. Jhaveri

Details on

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/forum/details.asp?mod_id=180725&offset=2

2. Can he purchase land for that amount and save capital Gain Tax ?

If that land is for the purpose of CONSTRUCTION OF HOUSE. Its not necessary that construction should be completed within the time limit (1 / 3 yrs before/after transfer) BUT amount must be INVESTED withing specified time

DETAILS:

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3. Can he purchase flat in their family member name i.e mother, father,wife,son etc. and save on capital gain tax ?

YES

Extracts of (Balraj v. CIT [2002]) delhi

For the purpose of attracting the provisions of section 54, it is not necessary that the assessee should become the owner of the property purchased. The word ‘purchase’ occurring in section 54(1) has to be given its common meaning, viz., buy for a price or equivalent of price by payment in kind or adjustment towards a debt or for other monetary consideration. Therefore, for the purpose of applicability of section 54, registration of the document is not imperative

CIT Vs. Ravinder Kumar Arora

(property can also be purchased in joint name of spouse)

4 Can he purchase flat for @ 50 Lac and balance amount will be use for taken Bond for saving capital Gain Tax ?

Yes , for now time limit for bonds of NHAI & REC u/s 54 EC is 31.03.12 (subscriptttion close after that)

5. Can he purchase flat for @ 50 Lac and balance amount will be use for upgradtion of that flat like furnishing etc.

Exemption is granted for purchase or construction ONLY. Upgradation will be allowed IF the construction is REAL and NOT CONSTRUCTIVE in nature

Extracts of Mrs. Meera Jacob v. ITO

"addition of a floor of a self-contained type to the existing house would have qualified for exemption"

However,the assessee would not be entitled to deduction in respect of investment in modification/expansion of an existing residential house.