Dear Members,
I Invite All Professionals (Those Having Practicle Exposure) to Discuss Section 54B of Income Tax Act.
Section 54B Says:-
that the assessee can invest the long term capital gain earned by him during the previous year can be invested in a agricultural rural land i.e. the assessee can purchase an agricultural rural land from the amount of capital gain earned by him within a period of 2 years or if he is unable to do so he can also deposit the amount in Capital Gains Account Scheme (CGAS) within six months of the end of the previous year. The amount so deposited has to be used for the aforesaid purpose within the stipulated time period otherwise it would be treated as long term capital gain and will be taxed accordingly. The other condition to be satisfied to avail this exemption is that the land so purchased from the capital gains must be retained at least for a period of 3years and if it is sold by the assessee before that the capital gain arising from the sale of the asset will be calculated by considering the cost of acquisition of such asset as nil or the other treatment is that the new asset is taxed in a normal manner and the previously exempt capital gain is taxed subsequently in the current previous year.
but the fact that capital gains arising from the sale of agricultural land is anyway exempt under section 2(1A) is overlooked here.
This gives the assessee the leverage to purchase agricultural land from the taxable capital gains but not hold it for the intended period of time. Rather, the assessee can very well sell the property in a few days without bothering about the tax liability as the new capital gain is exempt under the act.
This is Loophole. What You Says ?
CAclubindia
