Query on capital gain tax

612 views 3 replies

Ravi

Mgr

28 Points Posted on 23 May 2012

Query: Can I adjust the old installments for a new property (possession is still pending) against the capital gain that I have incurred after purchsing the 2nd property?

Here are the details... I sold my flat and incurred CG (CG is Capital Gain) of ~10lacs in Dec 2010 and deposited the same in CG Account with a Bank. Prior to this I had purchase an under construction property in Jun 2008 and paid all the installments by Jan2010 (so before I incurred the CG). This new property/flat is still under construction and I expect the possession by Aug 2012. Can I adjust the CG against the installments of this new property those are already paid (prior to Jan2010).

If the above text is confusing then here is the sequence of events...

2002 - Bought Property1 (Resale, ready to move-in)

2008 - Bought Property2 (Under construction)

2008-Jan 2010 - Paid 95% of the installments of Property2

Dec 2010 - Sole Property1, Had Capital Gain of ~10lacs

May 2011 - Deposited the CG of 10lacs in Bank (CG account)

Aug 2012 - Expected possession of Property2

Now can I withdraw the money from CG account and show the old receipts dated 2009-2010 against the same as possession of Property2 is after the Capital Gain was incurred.

Appreciate your valuable feedback.

Regards,
Ravi

Replies (3)

PRITAM JAIN, CA , CS

Practising CA CS

398 Points Posted on 26 May 2012

In your case almost all the money is invested before within the period of 1year before the sale of property 1 and construction is also completed within 3 years from the date of capital gain so you have complied with the conditions of sec. 54 of the act. and you are allowed the exemption of Capital Gain of Rs. 10 lacs

I think u can withdraw ur money from capital gain scheme account

looking at the complexity of the problem i would suggest to reconfirm from other experts

Regards

Ravi

Mgr

28 Points Posted on 28 May 2012

Thanks Pritam, I thought so... but since almost all the payments for the new property was done more than a year prior to incurring the capital gain (Capital gain incurred on Dec 2010 and most of investment was made before Dec 2009, only one payment of 2lac was made in Jan2010), I wanted to cross check with the forum that I can still show the payments made prior to Dec 2009 against the capital gain as the completion of new property complies with the sondition of sec 54. I am also taking help from a Tax firm, will share the udpates once I come to know.

Br/Ravi