29 April 2018
A sold a residential property IN 2017-18 and purchased a plot on which he will construct residential house within 3 years of selling his residential property.
1, WILL LONG TERM CAPITAL GAIN ON THE SELLING OF PROPERTY BE EXEMPT IN THIS CASE
2. IF YES, WHETHER HE CAN CLAIM SUCH EXEMPTION IN HIS INCOME TAX RETURN FOR THE FINANCIAL YEAR 2017-18 AND IF SO WHAT HE WILL MENTION IN HIS INCOME RETURN OF 2017-18 AS CONSTRUCTION IS YET TO TAKE PLACE
29 April 2018
SIR, THE PROCEEDS OF RESIDENTIAL PROPERTY INCLUDING CAPITAL GAIN WAS RS. 35 LAKH. THIS AMOUNT OF RS. 35 LAKH HAS BEEN UTILISED IN BUYING A PLOT WORTH RS. 50 LAKH (BY INVESTING RS. 15 LAKH FROM OWN POCKET. ) BEFORE TIME FOR DEPOSIT IN 'Capital gains account scheme 1988" CAME TO END. NOW FOR CONSTRUCTION EXTRA AMOUNT WILL BE REQUIRED WHICH WILL ALSO BE SPENT FROM POCKET.
KINDLY ADVISE
1. WHETHER STILL CAPITAL GAIN IS REQUIRED TO BE DEPOSITED IN 1988 SCHEME
2. WHETHER CAPITAL GAIN WILL BE EXEMPT IN THIS CASE IF CONSTRUCTION IS COMPLETED WITHIN 3 YEARS
AS CONSTRUCTION IS YET TO TAKE PLACE HOW PURCHASE OF PLOT WILL BE SHOWN IN INCOME TAX RETURN FOR THE YEAR 2017-18 TO CLAIM EXEMPTION AS THERE IS NO SUCH COLUMN.IN THE ITR FORM
The replies of the two experts with regard to deposit the amount in Capital Gain Scheme are opposite, as such other experts may give their advice in the matter.
The query is reiterated below:
A sold a residential property IN 2017-18..THE PROCEEDS OF RESIDENTIAL PROPERTY INCLUDING CAPITAL GAIN WAS RS. 35 LAKH. THIS AMOUNT OF RS. 35 LAKH HAS BEEN UTILISED IN BUYING A PLOT WORTH RS. 50 LAKH (BY INVESTING RS. 15 LAKH FROM OWN POCKET. ) in 2017-18 itself that is BEFORE TIME FOR DEPOSIT IN 'Capital gains account scheme 1988" CAME TO END(which date is 31.7.2018).. NOW FOR CONSTRUCTION EXTRA AMOUNT WILL BE REQUIRED WHICH WILL ALSO BE SPENT FROM POCKET, The construction on the plot will be completed within 3 years.of selling the residential property.
Please advise.
1. WHETHER STILL CAPITAL GAIN IS REQUIRED TO BE DEPOSITED IN 1988 SCHEME
2. WHETHER CAPITAL GAIN WILL BE EXEMPT IN THIS CASE IF CONSTRUCTION IS COMPLETED WITHIN 3 YEARS
3. In case reply to query is "Yes" and AS CONSTRUCTION IS YET TO TAKE PLACE HOW PURCHASE OF PLOT WILL BE SHOWN IN INCOME TAX RETURN FOR THE YEAR 2017-18 TO CLAIM EXEMPTION AS THERE IS NO SUCH COLUMN.IN THE ITR FORM
30 April 2018
1. What and from where will you deposit the amount in a case where entire sale proceed of Rs 35 Lac has been utilised towards purchase of Plot for the purpose of construction of a "New Asset". So there is no need to open a CG Scheme 1988 account. 2. Yes 3. In the Return of Income you can provide the details of Deduction U/s 54 in the Schedule Capital Gains. In Part B you have to show the Capital Gains and in Part D of the shcedule you have to furnish the details of amount invested for claiming deduction U/s 54.
30 April 2018
Thanks Bafna Sir. But in part D of schedule, one has to show date of acquisition/construction of new asset whereas at present new asset is in the form Plot only where residential construction will be done with 3 years of the selling of old residential property. So
1. can we show the date of purchase of plot as date of acquisition of new Asset in the above mentioned column of Part D.
2. How income tax department will be conveyed when construction will be completed within 3 years.
02 May 2018
1. Yes 2. We can not convey to even ourselves that how much amount is likely to be invested for the construction. Keeping in view the legal requirement for availing the deduction we can show the amount invested till the due date of return filing.
03 May 2018
Sir, you will kindly appreciate that my 2nd query above " How income tax department will be conveyed when construction will be completed within 3 years" is relevant from the point of view that in case construction is not completed within 3 years, the long term capital gain does not remain exempt. So how income tax will come to know that the assessee, who has got LTCG exemption when he purchased plot has completed the construction in 3 years and is eligible for the exemption, which in fact has already been given to him.
04 May 2018
Thanks Sir, but is it o.k. that in schedule D, (under the Head Capital Gain) in Income Tax Return, in the column "date of acquisition/construction", date of acquisition of plot may be shown and exemption may be taken of long term capital gain, which is included in the cost of plot purchased in the same financial year in which residential property.was sold?
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