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Exemption under section 54 & section 54gb?

kabir (owner) (61 Points)

14 May 2018

can exemption under section 54 & section 54GB both can be avail in a single gain transaction?
i have asked this earlier and there is mixed answer but majority of expert here say yes do, but in the ICAI text book it say different, under section 54GB exemption is available when net consideration is used in buying share of a new company and then that fund is used is buying new plant & machinery.

here i have attach a image fromthe text book and highlight it also if net sale proceed has to used to avail exemption under section 54gb how can one avail the exemption under 54 and 54 gb in a single LTCG gain.

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4 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (161002 Points)
Replied 14 May 2018

The answer lies in its provisions:...............

Read further...... though not in query.......... but is in the section...........

(a) if the amount of the net consideration is greater than the cost of the new asset, then, so much of the capital gain as it bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45 as the income of the previous year; or

(b) if the amount of the net consideration is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45 as the income of the previous year.

kabir (owner) (61 Points)
Replied 15 May 2018

thank you sir thanks a lot.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (161002 Points)
Replied 15 May 2018

My Pleasure........

kabir (owner) (61 Points)
Replied 06 July 2018

sir i am thankful for you answers but sir i am seeking for you expert advice once again in the same matter with a small case

assessee want to buy new plant and machinery againt the gain in residential house property and looking for exemption under 54GB

total amount want to invest in new plant and machinery Rs 4000000, my question is can he form a new company with minimum/lowest amount prescribe by the company law Rs 100000 as authorised capital and paidup capital and hold 50+ % in shareholding and voting right and create a structure where he can provide that Rs 4000000 to the new company rather then going for a authorized and paidup capital of Rs 4000000 and paying high roc registration fee.

sir as the law say 50%+ voting or shareholding right so can he create a structure where he does not have to for a company with high capital of 4000000 and can save heavy amount as fee of ROC ,can it be possible with a lower authorised captial

sir i hope i have made the case clear sir this advice of your will be really really meaningful and significant for me and for the community i hope sir you will reply quickly.