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Income tax(capital gains)

nilakandan (Manager) (58 Points)

03 September 2009

Please reply the following:

Mr.X sold a residential property and has deposited the sold consideration of Rs.9,00,000/= in the Capital Gains Accounts Scheme. After three years, the deposits have been matured and Mr.X is ready to withdraw now. Is there any tax implications? Is there any capital gain tax? If so, how?

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5 Replies

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 03 September 2009

The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme³⁷ which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :

Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,—

(i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and

(ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid

CA Hemant Kumar (CA, LLB (p), B.Com) (204 Points)
Replied 03 September 2009

the opinion of Mr. Sampat Jain is right

if the amount deposited in the Capital gains scheme is not utilised within the specified time limit,

then the whole of the amount which is not utilised is chargable to Capital Gains tax.

Here the whole of amount is not utilised and thus whole amount is taxable.

But as you have written that you have deposited Sold consideration in the scheme then it may be possible that capital gain is lesser than the aforesaid amount....

plz clarify that if you have deposited whole of the sales consideration or only the capital gains part....so that i may help you more...

nilakandan (Manager) (58 Points)
Replied 05 September 2009

Sir,

he has deposited whole of the sale consideration. Now, my question is, at present, he is not willing to buy any new assets and he wants to withdraw such deposits. Will it attract capital gains tax? if so, how and howmuch?