| QUERY: | A flat was sold. The AO adopted stamp duty value. The assessee invested full stamp duty value in another flat. Whether the assessee is entitled for deduction under section 54F? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 50C, 54F |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, deductions, residential house, stamp duty |
| QUERY: | In the joint development agreement, when land owner is entitled to 5 flats in a building to be constructed by the developer on land belonging to the assessee landlord, is exemption u/s. 54F available to the assessee land lord? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 54F |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, exemption, residential house |
From the fact it is clear that land owner would retain the land and developer would allot five flats as consideration for transfer of development right to developer.
As per DCIT v. G. Raghuram [46 ITR 136 (Hyd.)], the cost
| QUERY: | An assessee received residential house property under will during financial year 2000-01. The previous owner of property had purchased the property in the year 1975. The said property has been dismantled by the assessee and same is sold under the construction stage during the financial year 2009-10. Can assessee get exemption u/s. 54 or not. If not, can the assessee get the exemption u/s. 54F due to property is under construction ( i.e., said property is not residential property at the time of sales). |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 54F |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, exemption, Income from House Property, residential house |
As I understand from the query, that the assessee has received a residential house property under will during the financial year 2000-01, which was purchased by the previous owner in 1975. Now dismantling the said property, the assessee has sold the said property in the financial year 2009-10. I presume that the previous owner was
| QUERY: | As per sections 54/54F of the Act capital gain arising from sale of a residential house is exempt if the amount of capital gain is invested in purchase or construction of another residential house by the assessee. Whether the exemption is available if the new house is purchased by the assessee jointly in the name of wife? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 54F |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, exemption, residential house |
In CIT v. Ravinder Kumar Arora [342 ITR 38 (Del.)], the facts were, the assessee claimed exemption of capital gain to the extent of Rs. 3,18,59,276/- under section 54F of the Act on account of purchase of a new house property, out of the total gain arising from sale of land. The AO rejected the claim because the house had been purchased in the joint names of
| QUERY: | X is the owner of a flat, and he is also a co-owner in another flat with his wife. They wish to sell both these flats and invest the proceeds in a larger apartment,. X wishes to know whether such joint investment in one flat will be sufficient for capital gains exemption. |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 54F |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, exemption, residential house |
Yes. The main purpose of section 54 of the Income tax Act, 1961 is to give relief in respect of profits on the sale of a residential house. Section 54F of the Act, provides that where any capital gains arises from the transfer of any long term capital asset, other than residential house and the assessee purchases within one year before or after the date on which
| QUERY: | Section 54EC caps exemption at Rs. 50 lakhs, whether caps of Rs. 50 lakhs: (a) Is applicable qua assets sold? (b) Whether assessee can claimed exemption only in one year (c) Whether limit of Rs. 50 lakhs is applicable to each financial year, if yes, then can assessee invest Rs. 50 lakhs in two financial years, falling within a period of six months after date of transfer? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 54EC |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, deductions, exemption, long-term capital gains |
(a) No, section applies to assets sold during the year and not the qua asset.
(b) The exemption should be claimed in the year in which long-term gain arises and invested in long-term specified assets within six months from the date of transfer.
| QUERY: | I sold my residential house property for Rs. 1.2 crores in December, 2013 which I wanted to re-invest in NHAI bonds. I understand that the investment in NHAI bonds needs to be made within 6 months from the date of sale and the restriction for such investment is Rs. 50/- lakhs per financial year. Accordingly, I made a plan of invest Rs. 50/- lakhs in January, 2014 once and again in May, 2014 Rs. 50 lakhs whether I would get a exemption of Rs. 1/- crore from long term capital gain tax. However, my advisor informed me that there are some litigations involved in this point. Can you please clarify what exactly is the litigation involved and how it can be mitigated?If that is so why is this restriction of Rs. 50/- lakhs per financial year has been prescribed in the Act? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 54EC |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, exemption, Income from House Property, long-term capital gains |
Yes, In ITO v. Ms. Rania Faleiro [142 ITD 769] the Panji Tribunal has held as un-der:
“The plain reading of section 54EC(1) as well as the proviso thereto clearly sug-gests that the limit of Rs. 50 lakhs as given under the proviso is as per person per financial year. There is no ambiguity in the interpretation, Had there been an intention of the legislature to restrict the exemption of Rs. 50 lakhs, the legislature would have provided the embargo in this regard
| QUERY: | Investments made u/s. 54EC beyond time limit u/s. 139(1) i.e. before expiry of 139(4) time limit is eligible for exemption? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 139(1), 139(4), 54EC |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, exemption, time limit |
The exemption up to Rs. 50/- lakhs would be available under section 54EC, if the capital gains arises from the transfer of a long term capital asset, (being the original asset) and the assessee has, at any time within a period of
| QUERY: | ‘P’ had to sold her property in order to finance her daughter’s medical expenses. The agreement for sale was entered for Rs. 50/- lakh. She received only Rs. 35/- lakh due to dispute with the buyer. No possession of the property was given. She does not have money to invest in order to claim exemption u/s. 54. The AO passed the order levying tax on Rs. 50/- lakh. Whether AO is right? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 2(47), 54 |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, exemption, profit on sale of propety, Transfer of Property Act |
In this case transfer is not complete, because of property has not been given and therefore there is no question of investing in another house to claim exemption under section 54.
| QUERY: | A NRI Tax Payer in 2003, booked a Flat in Kolkata, basically for investment purposes. A Three Room Flat with specific Flat No. 32G, was allotted to him in May 2004. He went on paying the Price as per the Agreement, aggregating to Rs. 34,62,659/-, according to the progress of the Building Construction. In 2006, he decided to return to Kolkata permanently and has been looking for a Residential Flat for his residence. He got a bigger 4 Bed Room Flat No. 31J in the same building. He made an initial payments of Rs. 8,35,200/- to the allottee of the said Flat No. 31J, as commitment money, with a clear understanding that, on his return to Kolkata, he will sell the Flat No. 32G allotted to him and pay the balance amount of Rs. 67,00,000/-. He returned to Kolkata permanently on 31-1.2008 and sold the flat allotted to him on 3-6-2009 for net Sale Price of Rs. 67,00,000/- and paid for the bigger Flat No. 31J, the balance of the agreed amount. He took the Physical Possession of the bigger Flat No. 31J on 13-11-2008. Now, the question is, whether the Capital Gain on Sale of the Flat No. 32G, allotted to him in the Year 2004, after FIVE Years of the date of allotment would be considered as a Long Term Capital Gains and the said Capital Gains on an Investment for Residential Flat within one year from the date of sale will be an exempted income in terms of the Provisions contained in section 54 and/or section 54F of the Income-tax Act, 1961. |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 54 |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, exempt income, indexation, long-term capital gains, Right in flat |
A right in Flat No. 32G was acquired in May, 2004, which was under construction. For which he made payments in instalments. The said right was sold by him on 3-6-2009 without taking the possession of the said flat.
|
Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material. Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. Neither the author nor itatonline.org and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of itatonline.org |