Capital gain

This query is : Resolved

Rakesh B. Surve (Querist)
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07 January 2016 we rcd 5 flats from builder from joint venture .we are not in state to sell the flats because we want to let out the flats. but we have to pay Rs.1500000 towards maintenance charges and electricity. if we sold one flat and gave this amount to builder for that expenses , in that case Is there capital gain raise? if yes how I tackle this case? can I get deduction of this expenses . Plz suggest.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 January 2016 Transfer arises on sale of a flat. The amount received on sale has to be considered for the purpose of computing capital gains. Since you are not investing the capital gains /sales consideration in the eligible exemption mechanism, you will not be allowed exemption from capital gains. Further, the amount paid towards the maintenance and electricity of a let out residential house is also not deductible.
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A philosophical way out is still there, may or may not be practical.
If you invest the capital gains in a smaller residential flat, you can claim exemption U/s 54.