Sale of urban plot of land & ltcg tax saving

Tax queries 1598 views 3 replies

Valerian Dsouza

Manager Audit & Taxation

413 Points Joined August 2007

A person (resident Individual) has sold (June-2012) Urban Plot of land purchased about 25 years ago.

A year ago (March-2012) that person gifted 50% rights of the property to spouse through gift deed, who contributed to equally to purchase the plot. Before that the plot was in single name. But there is no proof to produce that both contributed for the plot..

Now, they want to reinvest the proceeds in new residential bunglow, or flat.

1. 1st Owner is already having 1 flat in city, which is let out and is having agriculture plot in village.

2. Spouse second owner through gift deed is having 2 flats, in city. one is self occupied another one under construction.

3. Where clubbing provisions can apply for gifting to spouse without adequate consideration?

4.Whether they can avail section 54F, if they purchase new Residential bunglow before July-13 or invest the

proceeds in Capital gain saving account?

Many Thanks for your kind advice.

Valerian Dsouza

Replies (3)

Raju (Meger, Aquisi,Takeover)

Audit Assitant

56 Points Joined December 2010

Status: Individual

Date of Purchase : Before 25 Years Ago ( 1986 )

Date of Sale of Plot : June 2012

Analysis of the case

Property is gifted on the year ending 2012, means the right has been transferred not the possession of the of the property through the gift deed .On one side we assumed that the 50% right has been transferred ( possession ) gift is not taxable if received from the relative. and you also don’t have the proof of the contribution and plot also in the name of the single person. No documentary proof of the possession of the wife is presenting here

1. I don’t think so that clubbing provision will apply in case of the gifting , it might be possible that income from the gifted property will club

Clubbing not applicable if:
The assets are transferred;
1. With an agreement to
live apart.

2. before marriage.

3. Income earned when relation does not exist.

4. By Karta of HUF gifting co-parcenary property to his wife.

L. Hirday Narain vs. ITO 78 ITR 26 (SC)

5. Property acquired out of pin money.

R.B.N.J. Naidu vs. CIT 29 ITR 194 (Nag.)

Ya definitely they can avail the deduction under section 54F

shivam gupta

Student

142 Points Joined January 2010

Sec 54F is not applicable in case , where the assessee owns more than one residential house , other than the new Asset on the date of Transfer of the UrbanLand.

In simple Words

Exemption U/s 54F is available if the assessee on the date of Transfer owns one Residential House and Further one Residential house purchased under Section 54F i.e only 2 residential house should be owned including the house purchased using the amount of Sales Consideretion under this Section i.e 54F

So the Husband should Buy the New One because the Wife Already had two flat & if wife utilise the amountof Sales consideration from Urban Land for Purchasing the Residential Property then the exemption will not be Available to her.

Note:- Husband can claim Full exemption u/s 54F even though he transferred his 50% right by way of Gift deed to his wife as Decided in a case Law.

Note:- Exemption is limited to purchase of one Residential House only.

alokedeep

Product Head

29 Points Joined March 2013

Please advise.

I sold off an un-construction flat in Apr,2014 that I had bought in June,2010 for a value of Rs.80.4 Lakhs, I had bought flat for Rs. 48 Lakhs+ ST(as levied by builder for un-construction property)

My purchase for this flat was funded by a Home Loan As the loan was only partially disbursed(around 34 Lakhs), the Bank did an internal transfer of loan in their books to new buyer and balance 46 Lakhs was paid to me.

As I am still searching property to invest, I have deposited the 46 Lakhs(Profit+My investment) in to Bank FD.

Please advise, how I take care of LTCG(if I need to pay) and Tax on Fixed Deposit(Bank is already deducting TDS on FD)