15 October 2013
Dear Sirs, I sold an ancestral urban land quoting my individual pan in the sale deed and deposited part of consideration in my individual bank a/c and part of considerarion in my HUF bank a/c. I have declared the capital gains in my individual income tax return only. MY QUESTION IS While filing my income tax returns of my HUF how will I show/describe the part consideration of ancestral land sale money deposited in the Huf bank a/c ? Please reply soon Thanks
15 October 2013
While computing computing capital gain if you have considered the money deposited in HUF bank account then no problem otherwise same is to be considered while filing HUF return.
16 October 2013
Dear Parul Mam/Sir, In the context of my first query your answer to which was very useful I have some related questions which are as follows 1)Suppose an assesse has some ancestral propery and income therefrom like rent from res. house, agricultural income, long term capital gains in some FYs. Does he have the libery or choice as per income tax laws to treat one or some of these income generated for the first time as his individual income or HUF income ?If the answer is yes then is it the position that once an income from ancestral property is shown/declared as huf income/individual income the same has to be continuously shown in the balancesheet of huf/individual to which it was first assigned ?
2) My second question is if an assesse has been showing income from some of his ancestral property as his individual income till date in his returns does now he has the choice to declare income from some other ancestral property(ies) generating income for the first time as his huf income in his huf returns in the below two cases a) he has never filed returns for huf till date due to below exemption limit income b) he has filed returns for huf till date as non taxable income
16 October 2013
Yes the person has the option in my opinion as the tax slabs of both individual and HUF are same so department should not have any problem. and yes the asset thereafter must be shown in the same accounts in which it was 1st shown.
16 October 2013
Dear Parul Mam/Sir, THANKS A LOT FOR YOUR ANSWERS. ONE LAST QUESTION I have sold two ancestral residential properties in FY2012-13 ,income(rent) from one of which I was showing in my individual return from 2008-9 since the time I received the said property in family partition and the other which came to my share for the first time in fy2012-13 after my mother's unfortunate demise. I quoted my individual pan no in both the registered sale deeds in FY 2012-13. MY QUESTIONS ARE 1)DO I NOW HAVE A CHOICE TO SHOW THE INCOME FROM CAPITAL GAINS FROM THE RESIDENTIAL PROPERTY WHICH CAME TO MY SHARE FOR THE FIRST TIME IN FY 2012-13 AS DESCRIBED ABOVE AS MY HUF INCOME AND APPLY PART OF THE PURCHASE PRICE OF THE NEW RES. PROPERTY FOR THE PURPOSE OF EXEMPTION U/S 54 ? I HAVE ALREADY UTILISED THE COMBINED LONG TERM CAPITAL GAINS FROM BOTH THE ANCESTRAL PROPERTIES IN PURCHASE OF A RES. FLAT IN MY INDIVIDUAL NAME IN FY 2012-13.
18 October 2013
Dear Parul Mam/Sir I have been anxiously waiting for your answer but haven't received the same as yet. Let us forget the illusrutive case which I have asked in the last query. LET ME PUT IT IN THE FOLLOWING WAY QUESTION- IF AS ASSESSEE HAS SOLD HIS ANCESTRAL RESIDENTIAL PROPERTY (RECEIVED IN FAMILY PARTITION) IN HIS INDIVIDUAL CAPACITY (BY INDIVIDUAL CAPACITY I MEAN HE HAS MENTIONED HIS INDIVIDUAL PAN NO IN THE REGISTERED SALE DEED) AND TAKEN THE CONSIDERATION MONEY IN HIS INDIVIDUAL BANK ACCOUNT ,THEN DOES HE HAVE THE OPTION TO TREAT THE SOLD PROPERTY AS HIS HUF PROPERTY AND SHOW THE CAPITAL GAINS UNDER HIS HUF I. T. RETURNS? IT IS URGENT PLEASE REPLY SOON
01 August 2024
In India, when it comes to treating capital gains and property ownership, the classification and reporting are essential to ensure compliance with tax regulations. Here’s how the treatment of capital gains from the sale of ancestral property would typically work in your scenario:
### **Understanding the Situation:**
1. **Property Sale and Ownership**: - **Ancestral Property**: This is property inherited from ancestors and held as part of the family’s wealth. - **Sale and Consideration**: The property was sold in the individual’s name, and the sale proceeds were credited to the individual’s bank account.
2. **HUF and Individual Reporting**: - **HUF (Hindu Undivided Family)**: A HUF is a separate legal entity for tax purposes in India and has its own PAN, and it can hold assets, including properties. - **Individual Capacity**: Since the sale was executed in the individual’s name and the proceeds were received in the individual’s bank account, the sale transaction is directly associated with the individual.
### **Tax Implications and Reporting:**
1. **Property Ownership and Sale**: - **Individual’s Responsibility**: Since the sale deed mentions the individual’s PAN and the consideration is received in the individual’s account, the individual is legally responsible for reporting the capital gains from this transaction.
2. **Capital Gains Reporting**: - **Individual Returns**: The capital gains from the sale of the property should be reported in the individual’s Income Tax Returns (ITR), not under the HUF. This is because the sale was executed in the individual’s name, and the proceeds were received by the individual. - **HUF Reporting**: The HUF cannot claim the capital gains if the sale was executed and the proceeds were received in the individual’s name. The HUF would need to be the owner of the property and receive the sale proceeds to be able to report it as HUF income.
3. **Tax Planning Considerations**: - **Capital Gains Exemption**: The individual may be eligible for exemptions under sections like 54 or 54EC if the proceeds are invested in specified assets within the prescribed time limits. These exemptions are available for individual returns, not HUF.
4. **Legal and Compliance Aspects**: - **Documentation**: Ensure all documentation, including the sale deed and bank statements, reflects the transaction accurately under the individual’s name. - **Consultation**: It may be wise to consult a tax advisor or legal professional to ensure correct reporting and to explore any available exemptions or planning opportunities.
### **Conclusion:**
In your case, since the property sale was conducted in the individual’s name and the consideration was credited to the individual’s bank account, the capital gains should be reported in the individual's Income Tax Return. The HUF cannot claim the capital gains from this transaction. Ensure to use the appropriate sections for exemptions if applicable, and consult a tax advisor for precise guidance based on your specific circumstances.
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