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LTCG exemption under section 54f on transfer of multiple plots

rahul rana (CA) (110 Points)

17 July 2022

1. can i claim capital gain exemption under section 54f on transfer of multiple industrial plots to buy one residential house property?

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18 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160453 Points)
Replied 17 July 2022

Yes, of course,,,, it can be....

1 Like

rahul rana (CA) (110 Points)
Replied 17 July 2022

Thanks for the clarification. i have one more question. how can we claim exemption under section 54EC & 54f together? e.g. i have net consideration from the sale of plots 10cr. & LTCG on the same is 2cr.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160453 Points)
Replied 17 July 2022

20% is your gain margin.

If invested 50L u/s. 54EC.... equivalent to 2.50 Cr. sales consideration.

So for sec. 54F you have to invest 7.50 Cr for 100% deduction.

4 Like

rahul rana (CA) (110 Points)
Replied 17 July 2022

Thanks alot sir 🙏

2 Like

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160453 Points)
Replied 17 July 2022

You are welcome ...

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160453 Points)
Replied 18 July 2022

A quiz for mind....

Suppose He had invested Rs. 50 lakhs in Sec. 54EC bonds...

& purchased a house property for Rs. 4 Crs. to claim deduction u/s. 54F.

What will be his tax liability?

Ans. 14 lakhs + surcharge + cess

rahul rana (CA) (110 Points)
Replied 18 July 2022

Sir, can we claim interest paid on home loan as cost of improvement. if yes, then how can we apply indexation of interest amount as total interest relates to different years.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160453 Points)
Replied 18 July 2022

Its controversial issue. Few case laws are in support of claiming interest as COI, but in general AO would not allow. There is no clarity in act, so no guaranty that you also get same result.

Natural justice says, its the cost incurred by assessee when he paid only margin money and not full amount initially. So while taking indexation on COA, whether he will choose the agreement date or date on which he fully repaid his home loan. If first agreement date, he cannot take advantage of deduction of interest, as the principal amount he could not pay on first date.

Indirectly it harms the assessee who paid full amount initially.

2 Like

rahul rana (CA) (110 Points)
Replied 18 July 2022

Sir in my case, my client has purchased property from development authority ( under state government) & payment has been made in installments which includes principal & interest part. sale deed date is different from allotment date & possession date. please guide which date should be considered for period of holding & how to compute cost of acquisition

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160453 Points)
Replied 18 July 2022

In general, allotment letter is taken as date of acquisition, while registered sale deed value is taken as COA. No need of segregating or adding interest part.

1 Like

rahul rana (CA) (110 Points)
Replied 19 July 2022

Sir, Can we take construction extension fees & penal interest on late payment of installments to land authority as Cost of improvement.

1 Like

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160453 Points)
Replied 19 July 2022

Construction extension fees can be considered, but none of the penalty, be it additional interest.

1 Like

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160453 Points)
Replied 19 July 2022

Construction extension fees can be considered, but none of the penalty, be it additional interest.

1 Like

rahul rana (CA) (110 Points)
Replied 22 July 2022

Sir, i need your guidance for below case

My client has capital gain against two industrial plot Rs.3.5 Cr. (net receipt 7 cr.) & there is LTCL on sale of one residential plot Rs.10Lakh (Net receipt Rs. 1 Cr.). for taking 100% exemption under section 54 F how much amount we need to deposit in CAGS account.

My cleint wants to deposit 7 cr only In that case how we should approach to get the maximum benefit..