54EC

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2011 I sold my flat in Dec'2010 which I bought in 1988.My LTCG is Rs.1.83 Cr after deducting indexation cost.Against this net gain,I will be buying a flat worth 70-80 lakh.
Now my query is can I put 50 L in Govt. Bonds such as REC or NHAI in this financial year and put another 50 L in April? thus claiming rebate of 1 Cr.As per I.T Act,maximum amount can be invested is 50 L per FINANCIAL YEAR.

CA Ankit Gulgulia (Jain)

CA Ankit Gulgulia (Jain) (Expert)
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11 January 2011 Yes 50L is Maximum limit per Financial Year , So Your way of Claiming 1 Cr is Within Law. This is Permissible.

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Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2011 Are you sure?Can you check again please?It is a big amount.One CA told me that "IT IS THE INTENTION & CONTENTION OF I.T TAX DEPT TO ALLOW ONLY ONCE.AND IF I CLAIM 1 CR.( MY FILE WILL SURE COME UNDER SCRUTINY)A.O WILL NOT PASS THE FILE. HE/SHE WILL SEND MY FILE TO HIGHER AUTHORITY FOR APPRAISAL."

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Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2011 Dear Ankit,You look great.

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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12 January 2011 Agree with Ankit

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 January 2011 One crore can be spread over to two years vide the clarification in http://www.simpletaxindia.org/2009/02/capital-gain-54b54ec54f-combined.html

But I feel that if the assessee prefers to do so by availing the celing of Rs. 1 crore by investing Rs. 50/- lakhs each in two financial years,it would mean that the law gives an additional benefit for those who postpone the transaction to the last quarter of the financial year thereby creating an adventurous situation inviting the risk of rejection by the income tax department.

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CA Ankit Gulgulia (Jain)

CA Ankit Gulgulia (Jain) (Expert)
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12 January 2011 You Can Refer the Link Below for sake of your Reassurance :

http://www.pdicai.org/ansDisp.aspx?queId=12434

http://finance.dir.groups.yahoo.com/group/ICAI_CIRC_MEERUT_CA/message/61539

http://www.etaxindia.org/2009/09/capital-gain-exemption-us-54-54b-54d-54ec-54f-54g-54ga-table.html

This Opinion is at Par with ICAI also sincein the Recent attempt of CA Final similar Question was Put and Suggested Answers of ICAI suggests that Rs 1 Crore can be Availed.

As far as Scrutiny is Concerned , I Think if we are technically interpreting the law correctly then no point of being afraid of appraisal.

Thanks for the Compliment. Try to Search out some Case Laws if u can but i am sure , Considering the language of the Act and its interpretation Rs 1 Crore can be Availed.

Regards
Ankit Gulgulia

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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12 January 2011 I want to add the following -

54(1)(b) - "whole of such capital gain shall not be charged U/s 45 "
.
"Whole of" means entire, and entire may be greater than 50.00 lac.
.
It shows that capital gain exceeding 50.00 lacs is also exempt. It does not restrict
the amount of exemption as such.
*
In the absence of any cap in the main clause, it is reasonable to construe that the exemption amount is not limited to Rs 50.00 lac.
*
In Income Tax "Financial Year" and "Previous Year" phrases have their own relevance.
*
The use of the phrase "Financial Year" shows that if assessee invests more than 50.00 lacs in a FY he will get exemption of Rs.50.00lac only. As such the cap is for the purpose of maximum amount of
investment.
*
So we should not get confused with the
" exempted amount of capital gain"
and " exempted amount of investment".

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Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2011 Dear Paras Bafna,

But do you agree that I can go ahead with my plan as explained above?

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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12 January 2011 Yes.

On behalf of Dear Paras Bafna and Dear Ankit Gulgulia you can

GO AHEAD WITH

your plan as explained hereinabove

because

I also GO AHEAD WITH their expertise.

We all give advance congratulations to you for your new flat.

(Some authors give advance thanks to the experts at caclub without knowing the person who is likely to answer - hope you are not among them).

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Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2011 S.K Rakhecha Dear,I accept your compliments very humbly.I left Mumbai due to family problems to Pune.I had a huge flat at Juhu Scheme.It was 5BHK flat.I have 2 minors sons.Due prevailing culture in our society,I am planning to buy 3 flats,one for ourself & 2 flats for my sons.Hence so much planning.I am enjoying life in Pune.Climate is very good & it is very economical here.

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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13 January 2011 Dear one,

Many thanks for sharing your thoughts.

It feels like we won "one crore" (ek crorepati ka dil).

Regards.

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