Capital gains under 54

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 November 2013 During the assessment year 2011-12 my client sold property for Rs.3558680/- on 1st feb.2011 and the capital gain arising from above sale of Rs.2289864/- has been utilized in constructing the another property. construction started at dec.2010 and completed in may 2011.and claimed full exemption of capital gain u/s.54 but my client have not filled the return of income for the assessment year 2011-12 before the due date. since the property have been constructed with in a period of six months he has not deposited in capital gain scheme.More over he has not got plan approval for the above construction. shall my client has eligible for claiming capital gain u/s.54.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 November 2013 1. It is wrong to say that the assessee has claimed exemption under any section. To claim exemption you need to file return (unless specifically exempted from filing tax return) unless you file the tax return.

2. nevertheless, given that you have utilized the capital gains for construction of a new property, even if the income-tax department issues you a notice for non-filing of return, there is a good chance that you will be able to get the benefit of exemption.

3. However, they will levy penalty for non-filing of the return.

4. I cannot comment upon the absence of plan approval, but it would pertinent that you have the documents to prove the construction expense.

CA Pallav Singhania

CA Pallav Singhania (Expert)
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02 November 2013 Tribunal has allowed exemption u/s 54 to assessee inspite of not depositing LTCG in capital gain before due date (31st July), but deposited the same or availed exemption u/s 54 before the due date of filing belated return u/s 139(4).

IT return records are properly organised which will show your willingness to comply with the provisions of IT Act, and this will go in your favor.

http://www.bcasonline.org/articles/artin.asp?773

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