14 January 2016
Please refer first proviso to section 54, in case, the amount not utilised for purchase or construction of residential house, shall be charged as capital gains of the previous year in which the period of 3 years from the date of transfer of the original asset asset expires i.e. in the previous year 2016-17 (Jan 2017 is 3 years from transfer of your residential property in Jan 2014) and it will be long term capital gain of the previous year 2016-17. Please refer Capital Gains Accounts Scheme, 1988, wherein, you are required to submit an application in Form G after getting the approval of the Assessing Officer.
14 January 2016
The New asset needs to be purchased within 2 years after date of transfer of original asset. In that case whether tax liability will arise in Jan 2016 ?
14 January 2016
No, capital gains will not arise if you purchase a new house within a period of 1 year before or 2 years after the date on which the transfer took place.
14 January 2016
The tax liability will arise at the time of withdrawal of such deposit from the capital gains account or on the date of expiry of the prescribed period of 2 years / 3 years, which ever is earlier. You can withdraw the amount and can pay tax.
14 January 2016
To claim deduction u/s 54, a new residential property needs to be acquired, in case of purchase it is 1 year before or 2 years after from the date of transfer and for construction it is 3 years from the date of transfer.
If we fail to purchase within 2 years, still we have an option to construct a new residential house in next one year i.e. within 3 years
Being professionals, it is ideal to quote section / rule / case law references, so that our replies will be added knowledge to those who are referring them. Without such references it seems to be our personal views.
The reply is believed to be suitable to the query posted i.e. taxability to capital gains in case of non-compliance with section 54 after taking benefit of the same:
Please refer first proviso to section 54, in case, the amount not utilised for purchase or construction of residential house, shall be charged as capital gains of the previous year in which the period of 3 years from the date of transfer of the original asset asset expires i.e. in the previous year 2016-17 (Jan 2017 is 3 years from transfer of your residential property in Jan 2014) and it will be long term capital gain of the previous year 2016-17. Please refer Capital Gains Accounts Scheme, 1988, wherein, you are required to submit an application in Form G after getting the approval of the Assessing Officer.
15 January 2016
CAPITAL GAIN ACCOUNT SCHEME, 1988 Closure of the account. 13. (1) If a depositor "desires" to close his account, an application shall be made with the "approval of the Assessing Officer" who has jurisdiction over the depositor to the deposit office in Form G or as near thereto as possible, and the deposit office shall pay the amount of balance including interest accrued, to the credit in the account of the depositor by means of crediting such amount to any bank account of the depositor. MY PERSONAL VIEW- "Desire" word shows that- the assessee can apply for fore closure of the account. The AO has to approve the application for withdrawal. Such approval is required for the purpose of tax compliance. The AO can ask to pay the capital gains taxes and on the condition can accord the approval to withdraw the amount from the capital gains account. The department receives taxes in advance and as such there is no loss of revenue to the department.
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