Capital Gains

This query is : Resolved

NARESH (Querist)
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02 January 2009 Please give your views on the follwoing matter:

Mr. A has booked a Flat on Jan 2004 and paid 1 lacs as booking advance:

He has received the allotment letter in May 2004 and he paid 90% consideration of the total Flat on July and Aug'2004.

Till Aug '08 he has neither received the possession nor the agreemnet has been executed.

Now if Mr A sells/ transfer the nomination to other person with the consent of the builder he will incurr Capital gains.

My Query/ clarifiaction

The Capital Gains shall be Long Term as the allotment was made in May 2004.

Indexation will be available on the basis of the payments made .

Exemption shall be claimed under section 54 and not 54F as the assest will be treated as "CAPITAL ASSET" and not House Property.

Please give your views if you all differ.

K V Subba Rao

K V Subba Rao (Expert)
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03 January 2009 Asset in the form of Payments made in 2004 is held for more than 36 months; hence it qualifies to be treated as Long-term Capital Asset

Indexation has obviously to be done adopting rates for respective financial years, that is FY 2003-04 for payment made in Jan 04 and FY 2004-05 for payments made in Jul and Aug 04

With regard to third point, it appears to me that for exemption purpose, Sec 54-F is relavent but not Sec 54