Exemption of long term capital gain under 54 or 54ec

This query is : Resolved

CA Sanjay Baheti (Querist)
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19 August 2013 My client being an individual has owned a residential Open Plot since 1985-86.Now he sold the same in F.Y.2013-14 (i.e.In month of June,2013) by way of registered Sale Deed. If we consider the long term capital gain arising therefrom after taking the benefit of Indexation nearly comes to Rs.8.00 Lacs.

Now to avoid long term capital gain @ 20% thereon i.e. Rs.1.60 Lacs,he has to invest either in another residential Plot within 2 years from the date of Sale/transfer & construct a residential House within 3 years from the date of sale/transfer bt virtu of section 54 of I.T.Act or Deposit the same in Capital Gain Account Scheme within 6 Months from the date of Sale but prior to due date of filing of regular return of Income relevant to Asstt.year 2014-15(i.e. on or before 31/07/2014)

Now query is as under:-

i) whether he can avail deduction under section 54 of I.T.Act as there is no income from this property since 1985-86. Moreover how much within maximum time limit he can invest the above asset as per section 54 of I.T act with mentioning of exact date & year.

ii) he has to invest on Capital gain Account Scheme within 6 Months from the date of sale or prior to due date of filing of I.T.return relevant to Asstt.Year 2013-14 i.e.31/07/2014 which ever is earlier or later by virtue of section 54EC of I.T.Act.
that is he has invest the same either on or before Dec,2013 or 31/07/2014 which one is to be considered.

Please confirm.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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22 August 2013 "My client being an individual has owned a residential Open Plot since 1985-86.Now he sold the same in F.Y.2013-14 (i.e.In month of June,2013) by way of registered Sale Deed."
Reply on the basis of above facts -
1. Exemption can be claimed U/s 54F and not U/s 54. Residential House and Residential Open Plot are not the same capital assets.
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2. Take care to invest the sales consideration and not merely capital gains.
on or before 31/07/2014.
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3. Further, Capital Gain Account Scheme is different from the scheme of Investment in
Capital Gain Bonds. In Capital Gain Account Scheme you can park your unutiled amount to which you have to utilise in construction/ (3yrs)or purchase of a residential house (2yrs)
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4. If you want to enjoy Section 54EC benefit, invest in capital gain bonds prior to Dec 2013 i.e. within 6 months only
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