Section 54f

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ritz

article

48 Points Joined June 2014

Please give your valued opinion

That the assessee opted and has also utilise the money in construction of house by 31/07/2014 , for the A.Y 14-15 infact he purchased the land and for construction engage the constructor and paid the full amount before 31/07/2014 ,Therefore he is not required to keep the money in special deposit account of bank .He filed the return for A.Y 14-15 on 26/09/2014 being a belated return . Now due to emergency he is changing his decision. Now he desired to sale out the plot and cancel the builder agreement by taking back the amount given to him and he will be coming out of the taking exemption u/s 54 F and in a term desires to pay capital gain and interest thereon by revising the return on or before 31/12/14 .The original return is late and lawfully cannot be revised. But as per the provision of Sec 48 and onwards if the assessee is not able to fulfill the conditions of Sec 54F then he can pay the tax and int in the year of default. This in view of these provisions, to seek your opinion that if the assessee do the same by 31/12/14 then he is eligible to do it. Kindly give your valued opinion.

Replies (6)

CA Piyush Gupta

Practice

142 Points Joined August 2012

Z

Tax Consultation (US and India)

2970 Points Joined September 2011

S. 54F(3)

Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head “Capital gains” relating to long-term capital assets of the previous year in which such new asset is transferred.

Therefore I don't think that there will be interest liability

2. Cancellation of agreement may give rise to cap gain in hands of builder, if he has received any consideration by cancelling the agreement.

3. Do not forget to compute gain in the new transaction aswell

Arif Ali

Apt Co Advisory

1230 Points Joined June 2009

The capital gain will be recomputed in the year of default and on that tax & interest will be paid. But here no default. It is changed of opinion. and not possible to revise the return,

Then now I think you can go for rectification of mistake u/s 154 online.

ritz

article

48 Points Joined June 2014

Return can be rectified u/s 154 only in two cases :-

1) only after the taxpayer has received an order under Section 143(1) from CPC Bangalore,

2) mistake which is apparent from the record .

But in our case assessee has changed his opinion after filing of return i.e. it was not a mistake apparent from the record.

Mihir

Wealth Manager

5293 Points Joined December 2008

You can cancel the construction contract with the builder but you cannot cancel the contract of the plot because it is purchased by you and the only way out is to sell the plot. You have to enter into sale agreement with someone to sell the plot. And there may or may not arise any gain from sale of plot..