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Capital gain exemption

ritesh (CA) (106 Points)

01 March 2012

hello everyone...

i will be selling my Flat to the Builder at the tune of 1.25 crore Rs.

i wanted to know whether the following tax planning would entitle me for the capital gain exemption under residential property head.

the plan is to invest the entire sum of money in FD and take a loan for the payment of new flat on the security of FD...

my question is whether this new flat taken on basis of loan will entitle me for the exemption of Capital gains which will accrue on the sale of old flat.

assuming all the formalities will be done within the laid down time.

thanks everyone.

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5 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 01 March 2012

In your case, as per my opinion, you will be eligibile for the exemption of the long term capital gain arising on the sale of flat.

Regards,

Devendra Kulkarni

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ritesh (CA) (106 Points)
Replied 01 March 2012

thanks devendra...i have the same view... Want to know further how many gives the same opinion... :)

Palash Gupta (Student...Hoping to pass Inter) (892 Points)
Replied 01 March 2012

ya ya ritesh if ur using the proceeds of gain to purchase new flat then exemption u/s 54EC shall be allowd to up upto amount of gain used for purchase of flat!!

Devendra (Chartered Accountant) (4775 Points)
Replied 01 March 2012

@ Palash : You are mistaken. In the above case one flat is sold and the proceeds received from the flat sold are used in buying another flat, so here the exemption will be u/s 54 and not u/s 54EC. Whereas exemption u/s 54EC is availed if the assessee has Invested the capital gains in certain bonds.

Regards,

Devendra Kulkarni