Capital Gains on Sale of Joint Commercial Property
This query is : Resolved
23 July 2022
A Commercial property purchased in 2008 by Husband Wife in joint name was sold in Feb-2022.
Husband already owns 1 Residential house, Wife already owns 2 Residential houses.
All Payments for Purchasing commercial property was made by wife, All sales consideration money was received by only wife.
Dear Friends kindly guide on questions :
1. Can Husband & Wife claim exemption of 54F ?
2. If sale money is received only by wife, is the Husband taxable ?
3. If property is sold in Feb-22 till when they can invest in purchase of residential property to
claim exemption?
Husband already owns 1 Residential house, Wife already owns 2 Residential houses.
All Payments for Purchasing commercial property was made by wife, All sales consideration money was received by only wife.
Dear Friends kindly guide on questions :
1. Can Husband & Wife claim exemption of 54F ?
2. If sale money is received only by wife, is the Husband taxable ?
3. If property is sold in Feb-22 till when they can invest in purchase of residential property to
claim exemption?
23 July 2022
1. As sale consideration is totally received by wife. unless there was any specific clause existed about ownership of the plot; wife would be considered 100% owner of the property. So husband cannot claim any exemption.
2. As per conditions of sec. 54F, wife already having 2 house property, not eligible for any exemption under the section.
3. Not applicable...
2. As per conditions of sec. 54F, wife already having 2 house property, not eligible for any exemption under the section.
3. Not applicable...
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23 July 2022
Dear Ramhiasir the property is jointly owned, names of both Husband & wife is mentioned in the Agreement so Husband is liable for Tax liability for LT Cap Gains??
Also depreciation was deducted every year from this property so how the cost inflation indexation will be calculated regarding depreciation ??
Regards
Also depreciation was deducted every year from this property so how the cost inflation indexation will be calculated regarding depreciation ??
Regards
23 July 2022
1. As the purchase amount was fully paid by wife, & sale consideration also fully received by wife, the status of joint property does't exist.
2. Depreciation cannot be claimed over land. If any structure then it will be ST gain. No question of indexation.
2. Depreciation cannot be claimed over land. If any structure then it will be ST gain. No question of indexation.
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23 July 2022
This Property is Godown. How it can be STCG ?? It was purchased in 2008 and sol in 2022 , Regards
23 July 2022
It was used as fixed asset and depreciation was claimed.
23 July 2022
My God!!! Dear r u sure because without indexation there will be heavy Tax liability ??? Regards
23 July 2022
Here you can refer sec. 50 of IT act in some details...
https://taxguru.in/income-tax/provisions-relating-capital-gains-case-depreciable-assets.html
https://taxguru.in/income-tax/provisions-relating-capital-gains-case-depreciable-assets.html
23 July 2022
Well there are few case laws where in Mumbai High Court & Gauhati High courts have allowed the investment in long term bonds for exemption u/s. 54EC stating that ......
the decision of the Gauhati High Court in the case of CIT Vs. Assam Petroleum Industries (P.) Ltd. reported in [2003] 262 ITR 587.
"We are in agreement with both the decisions of the Gauhati High Court as well as the Bombay High Court in holding that capital gain arising of long term capital asset, if invested in specified asset, the assessee is not to be charged capital gains and exemption provided under Section 54EC of the Act cannot be denied to the assessee only on account of the fact that deeming fiction is created under Section 50 of the Act. In other words, legal fiction created under Section 50 of the Act is though restricted to computation of capital gains, such deeming fiction cannot restrict application of Section 54EC which allows exemption of capital gains, if assessee makes investment in the specified assets. Thus, the assessee cannot be charged to capital gains when short term gains of long terms capital assets get invested in the areas specified under the law."
the decision of the Gauhati High Court in the case of CIT Vs. Assam Petroleum Industries (P.) Ltd. reported in [2003] 262 ITR 587.
"We are in agreement with both the decisions of the Gauhati High Court as well as the Bombay High Court in holding that capital gain arising of long term capital asset, if invested in specified asset, the assessee is not to be charged capital gains and exemption provided under Section 54EC of the Act cannot be denied to the assessee only on account of the fact that deeming fiction is created under Section 50 of the Act. In other words, legal fiction created under Section 50 of the Act is though restricted to computation of capital gains, such deeming fiction cannot restrict application of Section 54EC which allows exemption of capital gains, if assessee makes investment in the specified assets. Thus, the assessee cannot be charged to capital gains when short term gains of long terms capital assets get invested in the areas specified under the law."
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23 July 2022
Sir This sec 50 is horribly horrible !!!!!!!!! Due to this there is huge Tax Liability arising!!!!!
The more horrible "icing on the cake" is i just now read that as per Fin Act 2020 in STCG if the value as per Stamp Valuation Authority is more and sell value is less and variation is more than 10% , then SVA should be deemed as selling price. In our case SVA is more i.e. 48 lakhs and agreement value is 42L............ Hey prabhu....
Sir can u please guide in this regard. Dhanyawaad !!!
The more horrible "icing on the cake" is i just now read that as per Fin Act 2020 in STCG if the value as per Stamp Valuation Authority is more and sell value is less and variation is more than 10% , then SVA should be deemed as selling price. In our case SVA is more i.e. 48 lakhs and agreement value is 42L............ Hey prabhu....
Sir can u please guide in this regard. Dhanyawaad !!!
23 July 2022
Sir My heartiest Regards to U for showing interest in this matter!!!!
23 July 2022
Well, nothing can be done, tax liability will arise over sell consideration of Rs. 48 lakhs, unless you submit any justification for the price consideration based on specific reason/s, along with Valuation report obtained from any registered valuer.
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