Exemption on long term term capital gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2014 Hello,

I have sold my commercial property(i.e shop) and got long term capital gain. Within a span of one year i utilised the capital gain amount wholly in purchase of residential property.

I dont have any other residential property.

Will i get deduction under 54F or any other provision??

pls suggest

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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18 July 2014 sir, deduction u/s 54 F is available only on long term capiatl assets (if property should be held for more than 36 months )
hence benefit of 54 f is not availble to u

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2014 the property which i sold i held it for more than 3 years. so the gain is long term capital gain only.

and as per provision under sec 54F :
If the new asset is transferred within 3 years of its purchase
or construction the deduction given earlier from LTCG would
be charged as LTCG in the year of such transfer.

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CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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18 July 2014 to your original question, if the gain is long term capital gain and you have purchased the property with in one year of sale , you will certainly get benefit of sec 54F. but what is the doubt in ur mind

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2014 my doubt is that the long term capital gain is arising due to sale of commercial property.
So does it make any difference in sec 54f??

will i still get the benefit??

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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18 July 2014 u will get the deduction, as sec 54 (1) LT arising on transfer any capital assets is eligible for deduction . pls go throgh sec 54 (1) of IT ACT

Querist : Anonymous

Querist : Anonymous (Querist)

18 July 2014 my sale consideration is Rs12,50,000 and brokerage paid is Rs.50,000 so MY NET CONSIDERATION IS Rs.12,00,000 and the long term capital gain is Rs.5,40,000 and i have purchased new house property at Rs.7,00,000.

how much deduction will i get..??
please show the calculation

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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18 July 2014 YOU WILL GET PROPORTIONATE DEDUCTION U/S 54 (1) b, becoz if cost of new assets is less than net consideration , then dedction will be so much of the capital gain as bears to the whole of the capital gain in the same proportion as the cost of new asset vears to the net consideration

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Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2014 what you are saying is totally wrong as sec 54(1) deals with profit on sale of property used for residence.

where as the property which i have sold is a commercial property and not a residential property.

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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22 July 2014 my dear sir, pls refer to my reply dated 18 july , u will certainly get deduction u/s sec 54 F, when u ask for the calculation by typing mistake 54 F (1) b is being typed as 54 (1) b . i think u have not read my reply in full or u r trying to be oversmart. pls try to understnad law and not typing mistake,
sorry for inconvienence

Querist : Anonymous

Querist : Anonymous (Querist)

23 July 2014 i didnt mean to disrespect you, am sorry for that.

so according to 54f(1)b the working will be :
540,000 X 700,000 divided by 12,00,000

so 3,15,000 will be allowed as a exemption under sec54f.

so the remaining capital gain Rs.2,25,000 (5,40,000 - 3,15,000) will be taxable @ 20% under sec 112.

Is it correct???

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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24 July 2014 absolutely correct. sir ,and sorry if i hurt ur sentiments

regards

CA SUNIL K GARG

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Querist : Anonymous

Querist : Anonymous (Querist)

24 July 2014 thank you sir.

and if i invest the same long term capital gain in purchasing a rural agricultural land.

will i get any benefit??

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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24 July 2014 according to me , no