Capital Gain
This query is : Resolved
22 March 2008
I sold a plot of land and got capital gain(LTCG). I have 2 questions:
1. I borrowed loan from Bank and with that capital gain, repaid the loan. I feel that this is considered for investment. NOTE: The flat is not registered yet. If I repay the loan withing the first year of the CG, then i feel that i have satisfied the investment criteria for LTCG. Am i correct
2. When is the purchase is considered for Income Tax (for claiming CG benefit) purposes?
(a) is it at the time of registration
(b) is it at the time of signing the agreement to sell
Thanks
G
1. I borrowed loan from Bank and with that capital gain, repaid the loan. I feel that this is considered for investment. NOTE: The flat is not registered yet. If I repay the loan withing the first year of the CG, then i feel that i have satisfied the investment criteria for LTCG. Am i correct
2. When is the purchase is considered for Income Tax (for claiming CG benefit) purposes?
(a) is it at the time of registration
(b) is it at the time of signing the agreement to sell
Thanks
G
23 March 2008
Hello Gopala,
The exemption of CG is available if u invest the amount of CG or deposit that amount in Capital Gain Account Scheme till the last date of return filing immediately following the year in which capital gain accrued to u.
Since u have repaid the loan with that CG, which u had taken to purchase the flat. The exemption will be available to u subject to the conditions:
1) whether the plot of land u sold, was in ur possession for 3 years to term it as LTCG?
2) if above condition is satisfied, then deduction can be claimed under section 54F.
Note: the date of agreement to sell, when some advance money is paid to the vendor party is considered as the date of purchase of property.
The exemption of CG is available if u invest the amount of CG or deposit that amount in Capital Gain Account Scheme till the last date of return filing immediately following the year in which capital gain accrued to u.
Since u have repaid the loan with that CG, which u had taken to purchase the flat. The exemption will be available to u subject to the conditions:
1) whether the plot of land u sold, was in ur possession for 3 years to term it as LTCG?
2) if above condition is satisfied, then deduction can be claimed under section 54F.
Note: the date of agreement to sell, when some advance money is paid to the vendor party is considered as the date of purchase of property.
23 March 2008
Hollo Gopalaramanan
The exemption available for investment of full sale consideration under section 54 F or 54 EC. The repayment is not considered as investment.
With respect to the date for CG benefit the date of possestion is more important than the date of agreement or sale deed.
The exemption available for investment of full sale consideration under section 54 F or 54 EC. The repayment is not considered as investment.
With respect to the date for CG benefit the date of possestion is more important than the date of agreement or sale deed.
23 March 2008
repaymnt of BANK loan is not considered for exemption of capital gains tax.
we need to invest capital gains amount in a designated bank account till filing of return.
for long term capital gain purpose the period of holding should be a minimum of 36 months.
otherwise it is short term capital gain and added to the normal income and taxed at the applicable slab.
date of possession with evidence is the basis for capital gian duration beginning of 36 months.
R.V.RAO
we need to invest capital gains amount in a designated bank account till filing of return.
for long term capital gain purpose the period of holding should be a minimum of 36 months.
otherwise it is short term capital gain and added to the normal income and taxed at the applicable slab.
date of possession with evidence is the basis for capital gian duration beginning of 36 months.
R.V.RAO
23 March 2008
Hello Mr. R.V.Rao
I have a query regarding the above solution provided by u.......
If we have purchased a flat and made the payment by taking loan from the bank and in future i.e. before the expiry of 2 years from the date of sale of property, we use the amount of Capital Gain for the repayment of that loan, then in such case the exemption should be available to the assessee, because the amount of capital gain is invested in the flat??
Please make it clear with suitable examples at ur earliest........
Thanks in advance...
Reetika Goel
CA final Student
I have a query regarding the above solution provided by u.......
If we have purchased a flat and made the payment by taking loan from the bank and in future i.e. before the expiry of 2 years from the date of sale of property, we use the amount of Capital Gain for the repayment of that loan, then in such case the exemption should be available to the assessee, because the amount of capital gain is invested in the flat??
Please make it clear with suitable examples at ur earliest........
Thanks in advance...
Reetika Goel
CA final Student
31 May 2012
dear reetika
the onus to prove that capital gain has been invested into other residential property is on the assessee
and if you can prove the same by establishing nexus in between than it is acceptable
the onus to prove that capital gain has been invested into other residential property is on the assessee
and if you can prove the same by establishing nexus in between than it is acceptable
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