Raj Kumar Shaw (Partner) (37 Points)
03 February 2012My client Sold his house and made LTCG of Rs.54 Lakh. He invested the LTCG full amount in a new house property and claimed exemption in his IT return.But within two years he sold the new flat and reinvested the amount in NABARD within the same period of 2 years. Can his exemtion claim on LTCG continue for the investement made in NABARD.
R.S.KARTHIK
(Article Assistant----Final Student)
(59 Points)
Replied 03 February 2012
As per sec 54 (1) (ii) for the purpose of computing in respect of the new asset, any capital gain arising from its transfer within a period of 3 years of its purchase or construction, as the case may be, "the cost shall be reduced by the amount of capital gain".
Let me give u an example taking your numbers itself :-
Sale consideration of Old property = 80,00,000
(-) Cost of Acquisition =(26,00,000)
CAPITAL GAIN = 54,00,000
(-) Exempt u/s 54 =( 54,00,000) [ Amount invested in new house]
NET CAPITAL GAIN = ----NIL----
Since he has sold the New property within 3 years of date of purchase of that asset, the consequence would be :-
Sale consideration of New property = 60,00,000 [For Example]
(-) Cost of Acquisition = 0 (54,00,000-54,00,000) [ COA of new asset-Exemption availed earlier].
NET CAPITAL GAIN is = 60,00,000
In the present case since he has sold the property within 3 years, his capital gain must be calculated as above and also his investment in NABARD does not have any effect in computing the capital gain.
Giridhar S Karandikar
(Team Lead)
(7543 Points)
Replied 05 February 2012
\please note that for deduction u/s 54EC investments upto Rs. 50lacs in the bonds issued by REC or NHAI can only be claimed as exepmtion. Investment in any other bonds is not eligible for exemption.
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