02 June 2011
my client acquired a house property in 1978 for Rs.20 lacs and sold it in 2010 for Rs.4.50 crores.Stamp duty was paid on Rs.6.50 crores under section 50C.Indexed cost of the property is Rs.60 lacs at the time of sale.capital gain as per income tax act is Rs.5.90 crores whereas actual sale consideration received is only Rs.4.50 crores.my client want to save entire capital gain tax by investing in another house property under section 54.How much amount will he have to invest?If he invests only actual sale consideration, what will be the position under the income tax act?
02 June 2011
FOR CLAIMING EXEMPTION UNDER SECTION 54 U CAN INVEST ANY AMOUNT IN THE NEW HOUSE BUT CG WILL BE EXEMPT TO THE EXTENT OF COST OF NEW HOUSE IN THE CASE OF GOULI MAHADEVAPPA THE BANGALORE TRIB HAS OBSERVED THAT The Legislature consciously intended to apply the fiction under section 50C only to the expression used in section 48 and not in any other place. The “Capital gains” and the “net consideration” have to be worked out within the framework of section 54F, without imposing any fiction created by any other section. Thus, the capital gains arising from the transfer of any long-term capital asset for the purpose of section 54F has to be worked out applying section 48 without imposing section 50C into it. GOING BY THE CASE U WILL HAVE TO COMPUTE CG BY TAKING 4.5 CRORE AS SALE VALUE AND DEDUCTING THEREFROM INDEXED COST TO ARRIVE AT CG IT IS THIS CG UPTO WHICH EXEMPTION WILL BE ALLOWED EVEN IF U INVEST MORE BEACUSE COMPUTATION UNDER SECTION 50C IS DEEMED AND NOT ACTUAL
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