12 Replies
Arif Ali
(Apt Co Advisory)
(1230 Points)
Replied 03 December 2014
The land will be taxed as Long term capital gain, but building will be taxed on short term capital gain.
exemption will be available u/s 54 and 54F on LTCG. i.e on land.
Rakesh
(accountant)
(26 Points)
Replied 04 December 2014
Taxed levied on Land and building as long term capital gain.
CA Vap Patel
(Practice)
(1205 Points)
Replied 04 December 2014
A Case law in this matter will help you.
In case of CIT vs Citibank N.A.(2003)261 ITR 570(Bom) and CIT vs Dr D L Ramachandra Rao (1999)236 ITR 51 (Mad). It was held that,
" If land is held for more than 36 month but the building constructed thereon is less than 36 month old as on date of transfer, land becomes long term wheras the building is short term.In either case the gain arising on transfer of land shall be computed as long term capital gain and the gain arising from the transfer of super structure shall be treated as short term capital gain."
CA SUKSHAM ARORA
(CA)
(569 Points)
Replied 04 December 2014
BUT WHAT ABOUT EXEMPTION .................. IS IT CLAIMABLE U/S 54 OR 54F
Nitish Agrawal
(CA)
(810 Points)
Replied 04 December 2014
you have choice of claimeng exemption on land only either u/s 54 or u/s 54F subject to conditions mentioned in the respective sections
CA SUKSHAM ARORA
(CA)
(569 Points)
Replied 04 December 2014
are u sure Mr. Nitish. I mean would long term capital gain on land would be eligible for exemption U/s 54 also
Nitish Agrawal
(CA)
(810 Points)
Replied 04 December 2014
hmm i think you are right as sec.54 is available for building or land uppertanent thereto AND residential house property...hence sec.54 exemption should not be available for only land...sorry i am not sure....
CA SUKSHAM ARORA
(CA)
(569 Points)
Replied 04 December 2014
oh.. no problem even i m confused on this point..............so its ok:)
Z
(Tax Consultation (US and India))
(2970 Points)
Replied 04 December 2014
I don't think that exemption is available u/s 54 in this case, although you may claim 54F/EC.
The residential house property is not a long term capital asset. There are 2 distinct capital asset,namely land which is a long term capital asset and the building which is a short term capital asset.
You'll have to pay STCG, there is no exemption therefrom u/ S 54 series. Whats left is LTCG which is attributable to the land itself
KARAN BHUTANI
(LUCKNOW)
(30 Points)
Replied 04 December 2014
Actually it is a case of long term capital gain.......
No exemption only applies if u sell the property than purchase of New property should be taken...but in case of it act there can be 2 residential property in a town...or you can do is invest in capital gain a/c scheme....it capital gain......to avoid 30%of ltcg.....
Alok A Bhavsar
(CA Final Student)
(82 Points)
Replied 07 December 2014
Gain on transfer of Land and Bldng both will charged to LTCG (provided Bldng is used as for residential purpose) as both are held for more than 3yr. If bldng was not used for residential purpose i.e. used for business purpose will be taxed as STCG,
On transfer of Land you can claim exemption as per provision of Section 54F provided amount invested in purchase/construction of new residential property within time precsribed.
On transfer of Bldng you can claim exemption as per provision of Section 54/54F (Provided Gain is LT)
On transfer of Bldng you can claim exemption as per provision of section 54EC(If gain is ST)
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