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Exemption for capital gain

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HEENA PARWANI

ARTICLED ASSISTANT

29 Points Posted on 04 February 2014

I HAVE A QUERY REGARDING EXEMPTIONS THAT CAN BE AVAILED UNDER CAPITAL GAINS. PLEASE HELP URGENTLY

-> A SHAREHOLER OWNS A PRIVATE LIMITED COMPANY, NOW THE COMPANY IS BEING CLOSED DOWN, SO HE HAS SOLD THE PROPERTY OF THE COMPANY AND IS THUS GETTING MUCH CAPITAL GAIN TAX. BUT HE HAS USED THE SAME MONEY FOR PURCHASE OF ANOTHER LAND FOR STATING A PARTNERSHIP FIRM.

SO CAN HE CLAIM ANY EXEMPTION??

OR IS THERE ANY OTHER WAY TO SAVE GAPITAL GAIN TAX.

PLEASE HELP

Replies (1)

Ankit

CA CS

3064 Points Posted on 05 February 2014

Dear Heena,

According to me, unfortunately, you will have to pay the Capital Gains Tax since, the Company is a completely different assessee from the owner. The land is sold by the Company and the investment is made by the owner thereof. The gain thus arises to the company, who is liable to pay tax on it

However, since the shares are bought back by the company, the company may also be required to pay tax u/s 115QA (which was inserted by Finance Act, 2013). And since, the consideration received by the owner on the buy back of the shares is exempt u/s 10(34A) of the Act, even 54 series of sections would not apply…

If you have any other doubts, please feel free to ask..

- Ankit