Capital gains

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2013 HI sir My client has bought a agriculture property in August 2005 around 2.2 Acres of Rs. 12,50,000/- and the same has been sold in the year 2012 Of Rs. 51,00,000/- And Reinvested in Industrial Land in the year 2012 of Rs. 55,00,000/- whether my client has to pay any capital gains or any exemption is there further he has to capital gains means how much has to pay kindly suggest me the matter
thanking you sir

CA Pallav Singhania

CA Pallav Singhania (Expert)
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11 September 2013 If the said agriculture land is not capital asset within the definition section 2(14) of the Income Tax Act , the gain on agriculture land sale shall be exempt from income tax.

However, if its a capital asset then it will be liable for Capital gain tax and the same can be claim exemption U/S 54B.

However, Capital Gain on sale of Agriculture land can't claim the exemption U/S 54 D.

CA Pallav Singhania

CA Pallav Singhania (Expert)
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11 September 2013 Capital Gain on the Transfer of Agricultural Land (Section 54B)

Capital gains arising on the transfer of land used by an individual or his parents for agricultural purposes for a period of two years immediately preceding the date of transfer is exempt form the tax if the individual assessee has purchased another agricultural land within a period of two years from the date of such transfer (subject to the requirements).

Capital Gain on Compulsory Acquisition of Land and Building of an Industrial Undertaking (Section 54D)

Capital gains arising on the compulsory acquisition of any land or building forming a part of an industrial undertaking is exempt subject to the following requirements:

Such land or building was used by the assessee for the purpose of industrial undertaking for two years preceding the date of compulsory acquisition,

The assessee has purchased any land or building or constructed a building within 3 years from the date of the receipt of the compensation, and

Newly acquired land or building should be used for the purpose of shifting or reestablishing the said undertaking or setting up another industrial undertaking.

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CA Pallav Singhania

CA Pallav Singhania (Expert)
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11 September 2013 However, you can invest such amount in purchasing of an another agriculture land, so you can get exemption U/S 54B,

Or you can invest such amount in an HP within one year before the date of transfer or two years after the date of transfer or constructed within three years after the date of transfer (or from the date of receipt of compensation in the case of compulsory acquisition), a residential house to claim exemption U/S 54F.

NOTE:
The assessee should not own on the date of transfer of the original asset more than one residential house (other than the new house). He should also not purchase within a period of two years after such date or construct within a period of three years after such date any residential house whose income is taxable under the head “ Income from House property”(other than the new house).