CAPITAL GAIN ON SALE OF PROPERTY.

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Gopal Khetan (Querist)
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07 February 2011 CAPITAL GAIN ON SALE OF OFFICE PROPERTY.
I have a office property/commercial premises, on which I used to conduct my propreitorship business.For the past 5 years,I have joined another co. as a director, and have rented out this office premise,and showing the income as income from House property.

My question,is that I have received a good offer for this property for outright sale, In the event,that I sell this property,and invest the proceeds in another commercial premises, which would again be rented, would this attract capital gains tax.

Please advise.

K V Subba Rao

K V Subba Rao (Expert)
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07 February 2011 If you buy another property, you will get Capital Gains tax exemption. This position wouldn't change even if you let out property for commercial purpose.

(Note: This position may not apply in case of assesees in real estate business

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 February 2011 My question,is that I have received a good offer for this property for outright sale, In the event,that I sell this property,and invest the proceeds in another commercial premises, which would again be rented, would this attract capital gains tax.
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Ans:
Yes, it will attract capital gain tax.
you can not get exemption from Long Term Capital Gains by investing the sales consideration in Commercial Property.
If you are interested in rent buy a residential house, provided you are owning only one residential house at present.

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Guest

Guest (Expert)

07 February 2011 Agree with Mr. Bafna

K V Subba Rao

K V Subba Rao (Expert)
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08 February 2011 The Querist reported "I have a office property/commercial premises, ...which...I...have rented out...and showing the income as income from House property".

How should we look at classifying rent for property leased out for commercial purposes under head "Income from House property"

Guest

Guest (Expert)

09 February 2011 Sec. 22 is very clear and there is no classification for Residential and commercial property.

K V Subba Rao

K V Subba Rao (Expert)
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09 February 2011 If there is no classification (distinction) between residential and commercial property, please advise how the Querist would not be entitled to Capital Gains exemption, when he invests Capital Gain in purchase of "commercial" property

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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10 February 2011 Have you seen a famous old Hindi Movie-
Roti Kapda Aur Makaan- of veteran actor Manoj Kumar?

Capital Gains Exemption for the purchase of residential house are based on the Government policy which shows thrust on housing.

Every person requires a roof over his head. If you purchase a residential house, either you will dwell in it or somebody else, who can not afford to purchase but can pay rent to you will dwell in it.

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CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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12 February 2011 Income Tax is collected by the Government to meet its necessary expenditure, development of infrastructure and social welfare.

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One may note that interest on housing loan is deducted u/s 80C and the same deduction is not available for commercial property.

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The concept behind this is that government wishes more and more people should own home.