Capital gains

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sudhakar (Querist)
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27 July 2014 I have invested around 14,00,000 in my capital gains account. Recently i have purchased land for house construction for five lakhs . Due to urgency i have paid the money in cash. I would like to have expert advise on the following queries
1)Can i show the purchase of land and withdraw the amount incurred for purchase from my capital gains account.
2)The bank maintains that any amount greater than 25,000 can be withdrawn from CGA thru DD only. Can I take DD for that amount in my name from CGA and transfer to my savings account.
3) I have incurred additional expense as documentation charges, brokerage, registration charges etc. how can i show these expenses from CGA.
4) I am planning to construct a house, the construction which my father is panning to supervise by employing labor and material supply . I have applied for plan approval. how can i withdraw money in such cases. what are the documents to be given to bank for settling such amount. can i withdraw money as DD in my name or in my fathers name for such purposes.

Expert advise is requested as I am confused and finding it difficult to utilise money from my CGA.

The amount of Rs 5,00,000 is mentioned in the registration document.

I request the experts to give me advise/reply in a descriptive manner for the above mentioned points 1 to 4 which will help me resovlve the issue.

Regards

Sudhakar

gbalakrishnan

gbalakrishnan (Expert)
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27 July 2014 first u shd have taken advance ruling from tax authority on that basis you can draw but you did not, again you say u spent 14 lacs but document is for 5 lacs.

you committed serious errors.

can u show the source of cash, if not you will be in trouble with IT department.

so you can buy another property for full amount you have kept under CG ACCOUNT WITH approved investments or pay if your capital gains is long term the tax liability is 20% if short term then pay 30% tax liability and release the amount that is only option for you is my view!

sudhakar

sudhakar (Querist)
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27 July 2014 Sir,
Can you kindly go thru carefully regarding my query. I am sorry if you did not understand properly what I meant to ask.

I have invested in CGA 54F Rs 14,00,000 in SBI. This is the amount i have received by sale of Residential site and I am having documents.I feel I have not committed any errors.

I request you to carefully read my doubts expressed in the above query and kindly give me your valuable advise for the Points 1 to 4 mentioned above.

Regards

Sudhakar

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gbalakrishnan

gbalakrishnan (Expert)
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12 September 2014 SORRY sir.

if u have not withdrawn the amounts from CGA then y are safe ; but you made purchase of land without that 5 lacs from the bank CGA funds, as it is mandatory you have to see the bank issues bank drafts deducting from CGA funds to the seller and certainly you cannot draw on your name;

what ever u draw from that fund you need to pay to tax man 20% or 30% as per your terms of capital gains.

it is mandatory you shall buy property within the prescribed limitation under tax laws, as tax man does not draw as revenue to tax but a regressive measure to ensure excess funds more that indexation is liable for taxation;

even at a later day if u draw the cash even for purchases of any immovable property, still you would be liable to pay tax provided if your funds in CGA is not sale proceeds from agriculture holdings;

so it is advisable get your advance rulings if at all you want to use the funds to buy any immovable property that might help you better

it is advisable to get what you purchased land ensure that is properly accounted funds, else taxman may foist your cash as unaccounted and you would face unnecessary hassles.

it is unwise you purchased with cash but if that cash is by cash cheques then you may not face tax problems;

u have not accounted how u got cash?