01 September 2011
I PURCHASE A RESIDENTIAL PLOT IN INSTALLMENT IN 1985 IN QUARTERLY INSTALLMENTS I FINISHED MY INSTALLMENT IN 1990. BUT I MAKING REGISTRY IN JUNE 2010 AND SALE IN AUG. 2011 . MY QUERY IS (1 )MY SALE OF RESIDENTIAL PLOT IS IN SHORT TERM CAPITAL GAIN/LONG TERM CAPITAL GAIN. (2) I I BUY A RESIDENTIAL HOUSE IT IS EXEMT FROM CAPITAL GAIN. PLEASE REPLY
01 September 2011
As regards first acquisition of Plot details provided are a bit inadequate, however matter appears to be decided in view of transfer of ownership in property. There is no definition under the Income Tax of the term 'property' however it has to be construed per the rights as lawful owner whether corporeal or incorporeal. In case the ownership in plot or possession was transferred to you on the payment of final instalment in 1990, the date of acquisition would be reckoned thereform and would tentamount to LTCG, PROVIDED you have genuine and lawful documentations to that effect by way of Agreement or otherwise. In any other case the date of Registry would be reckoned the date of acquisition i.e. June 2010 and accordingly case will become of STCG. As regards your second point: • Section 54F concerns the sale of any asset other than residential house and subsequent purchase of another property. The conditions are: . the taxpayer must be an individual or HUF . the asset sold must not be a residential house (if it is, S54 applies) . the asset sold must be a long term asset . the new residential house must be • purchased within a period (T-1) to (T+2) years, or • constructed within a period (T) to (T+3) years
Concession in taxes if the cost of the new house is NOT less than the net consideration in respect of the old asset, then the entire capital gain is not taxed. But if the cost of the new house is less than the net consideration in respect of the old asset, the proportionate capital gain is not taxed.
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