Exemption U/s 54

Deep,

U can claim the exemption u/s 54 because tansfer of capital asset by way of a gift or a will is a transaction which does not fall under transfer.

Dear Deep,

Incase you transfer the House property (new asset) which you wer holding for period less than three years to your brother. Section 54 provides that in such case cost of acquisition shall be "nill".

One may also say as you have gifted this property your full value of consideration is also "nill" but it would prove non-sense by looking to provisions of section 50C.

As Section 54 says, incase New asset is transfered, the gain on such transfered shall be chargeble under section 45 considering the cost of acquisitoin as nil.

Further as you have rightly mentioned that section 47(iii) provides that nothing said in section 45 shall apply to transfer of asset by way of gift. In such scenario, In case you have any gain by virtue of provision of section 54 (Which shall ultimately routed through section 45) section 47(iii) takes care of its non taxability in Capital Gains heads.

So, it looks like, there shall be no tax issues in this transaction.

Thanks and Regards

Juzer