SANTANU KOLEY (ACCOUNTANT) (69 Points)
10 September 2010I am living a rented house in kolkata for last 20 years. Now I left the house as the building is reconstructed and the purchaser give me some money. What is the taxablity for this money in my hand ?
danish dabir
(mumbai)
(218 Points)
Replied 10 September 2010
can i know for what purpose the purchaser give me some money?. to take another rented house or for leaving the house
SANTANU KOLEY
(ACCOUNTANT)
(69 Points)
Replied 10 September 2010
The purchaser give money ( Rs. 15 Lacs) for leaving the house.
Sanjay Singh Rana
(CA)
(208 Points)
Replied 10 September 2010
Sec 2(47) provides that relinquishment of the asset or extinguishment of the right therein is transfer for the purpose of section 45
In this case u gave up your tenancy rights which resulted into extinguishment of an asset in your hand and would be treated as transfer and hence gain/loss would be assessable under section 45. here your COA will be treated as nil
FVC will be 15 lac
Less COA 0
LTCG/STCG 15 lac depending upon the period from when u acquired the rights (i.e since u became the tenant)
hope it will help u
thanks
Manoj BG
(Tax Professional and in Service)
(1795 Points)
Replied 11 September 2010
DEAR FRIENDS,
FULLY AGREED WITH EXPLANATION GIVEN BY SANJAY. GOOD EXPLANATION SANJAY.
REGARDS,
MANOJ
SANTANU KOLEY
(ACCOUNTANT)
(69 Points)
Replied 12 September 2010
SANTANU KOLEY
(ACCOUNTANT)
(69 Points)
Replied 13 September 2010
Thanks to all, now what will be the effect if I purchase a flat for self occupation amounting Rs. 13 lacs ?
Sanjay Singh Rana
(CA)
(208 Points)
Replied 13 September 2010
| Originally posted by : SANTANU KOLEY | ||
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Thanks to all, now what will be the effect if I purchase a flat for self occupation amounting Rs. 13 lacs ? |
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In the year of purchase no treatment will be done dear.
but if you sell it in future u can take 13lac as COA (will be Index in case flat held for long term) which can be deducted from the Full Value of Consideration received or receivable by you at that time 
No benefit can be claim from purchase cost since only deduction available for you is under section 54EC which is also when you make investment in specified securities :)
But if you take Loan for purchase of house u can claim deduction under section 24b upto Rs 30000 under head income from house property and also principal repayment up to Rs. 1 Lakh is totally deductible from your income if you have not made any other investments under section 80C. (The total cap for Sec 80C is Rs. 1 Lakh – so, the combined benefit of all the investments under sec 80c can't exceed Rs. 1 Lakh)
M .K. Jha
(CA Final)
(484 Points)
Replied 14 September 2010
i am not agree with sanjay because the amount of rs 15 lakhs can't be taxable under the head of capital gain it should be taxable under the head of Income from other sources....... and can't be claim dedudction u/s 54EC.
Reason : That amount received against a rented HP by Tenant. So it can't be call as asset for tenant. and no any tenacy right.....
IT MUST BE TAXABLE UNDER THE HEAD OF "INCOME FROM OTHER SOURCES"
M .K. Jha
(CA Final)
(484 Points)
Replied 14 September 2010
I Suggest You that you receive that amount in cash ...................... otherwise it should be taxable @ 30% of amount
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 14 September 2010
Dear Friends,
the said amount must be taxed under IFOS. As rightly said by my friend Mr.Mayank, the person does not own the asset. Right to tenancy arises only if the person pays rent. In the given case, that right does not arise, because u are not paying the rent, but u r vacating the property. So, there is no extinguishment of rights. So, it cannot be taxed under sec.45.
Sanjay Singh Rana
(CA)
(208 Points)
Replied 14 September 2010
| Originally posted by : CA.G.Muguntha Narayanan | ||
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Dear Friends, the said amount must be taxed under IFOS. As rightly said by my friend Mr.Mayank, the person does not own the asset. Right to tenancy arises only if the person pays rent. In the given case, that right does not arise, because u are not paying the rent, but u r vacating the property. So, there is no extinguishment of rights. So, it cannot be taxed under sec.45. |
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dear sir can u please tell me what does a rented house mean if he is not paying rent :)
please go through the query first and read word by word :) and Dear mayank Under Section 2(47) of the Income-Tax Act, 1961, the word "transfer" includes relinquishment of the asset or the extinguishment of any rights. A relinquishment takes place when the owner withdraws himself from the property and abandons his rights on it. It presumes that the property continues to exist after the relinquishment so there is no point of discussion on it. and for more clarity please go through section 2(14) & 2(47)
thanksss
Sanjay Singh Rana
(CA)
(208 Points)
Replied 14 September 2010
| Originally posted by : SANTANU KOLEY | ||
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Thanks to all, now what will be the effect if I purchase a flat for self occupation amounting Rs. 13 lacs ? |
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Sorry santanu koley ji i missed out the section 54F earlier....
you can claim deduction under this section
Section 54F: Capital gain on long-term capital asset other than a house property.
* Exemption available to individual or Hindu undivided family (HUF) only
* The transferred capital asset has to be long-term capital asset other than house property.
* To claim exemption under Section 54F, the tax payer will have to purchase a residential house property (old or new) or construct a residential house property. It may be in India or outside India. The new house has to be purchased within one year before, or within two years after, the date of transfer of the original asset. The new house has to be constructed, i.e., completed, within three years from the date of transfer of original asset.
The exemption under Section 54F will be available if the tax payer has not more than one residential house property. Amount of exemption equals the cost of new house multiplied by capital gains divided by net sale consideration. The amount of exemption cannot exceed the amount of capital gain.
so you can claim deduction under this section if you purchase residential & since you were living there from more than 20 years thats mean its long term since period of holding is more than 36 months
and treatment will be as follows
your long term capital gains = 15
less deduction under 54F = 13
Taxable LTCG 2
(Amount invested + Deposited in scheme) X Amount of capital gain
Net full value of consideration
13*15/15 = 13 lacs
But make sure u make such investment of 13lac before the due date of before the date of furnishing the return of income under section 139 or in case u are not able to utilise the money but planing to use the same in next 2 years u can deposit the same under Capital Gain Scheme before such due date.
thanks
CAclubindia
