1.) Mr.X sold a house and got a long term capital gain of 40L. He deposited the whole amount in Capital Gain Account Scheme. 2 years passed but he did not buy a house. Now he has an option of constructing it in the coming year. At this point of time, he can ask the bank to give back his money for construction. Can he even ask it to purchase land to construct on it?
2.) In case, 3 years passed and he neither purchased nor constructed a house, that amount of exemption i.e. 40L is treated as his income after the 3rd year and he has to pay tax on it. Does he have to pay any interest / penalty on that? If no, is'nt that a loss to the govt.?
3.) If Mr.X purchased land for Rs.35 Lakhs and constructed a small shed with Rs.5 Lakhs, can this be considered as construction and there on the exemption claimed earlier will not be added back?
Kindly help.
CAclubindia
