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Capital gain releted1

chittaranjan (working) (55 Points)

30 December 2011

Dear all

I sold a land and got some capital gain and I want to adjust the same gain against my loan what i had taken in two years back, can i adjust the same gain against the loan repayment , the laon i took last 2 years back.

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7 Replies

Vineet Kumar Sharma (Chartered Accountant) (316 Points)
Replied 30 December 2011

Using Capital Gain for the purpose of repayment of loan will not release you from taxing for gain arises on the sale of land.

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CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 31 December 2011

Chittaranjan ji,

You can not adjust CG against loan repayment. If you do so then Gain will be taxable. To claim exemption you must make investments as per the relevant sections applicable to you. If not than you should deposit the gain with the bank in the designated account, which is known as Capital Gain Tax Bank Account for 3 years.

members, please correct me if i'm wrong.

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 31 December 2011

Originally posted by : Ketan Waghela
	Chittaranjan ji, You can not adjust CG against loan repayment. If you do so then Gain will be taxable. To claim exemption you must make investments as per the relevant sections applicable to you. If not than you should deposit the gain with the bank in the designated account, which is known as Capital Gain Tax Bank Account for 3 years.

chittaranjan (working) (55 Points)
Replied 31 December 2011

Dear Sidharth / Ketan

Could you please tell me about the section 54 of income tax act, i hope this may aplicable for me bcz the time lime of two years is there, i can utilise the amount in the new proerty as i purchase in loan,

Plz confirm if i am wrong....

Regards

Chittaranjan

Z ( ) (2965 Points)
Replied 31 December 2011

Sir the time limit is for purachase or investment in construction of asset

If you are going to invest loan amount in purchase or construction of the asset then the Cap gain shall be exempted (subject to the conditions mentioned in sec.)

As it is not necessary that assesse should use the money only from the sales consideration

Text of the sec

(1) Subject to the provisions of sub-section (2), where in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, - (i) If the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or

(ii) If the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain.

(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139 , shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139 in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :

Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then, - (i) The amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and

(ii) The assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.

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@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 31 December 2011

@ chittaranjan : tell me how can i adjust my capital gain against my loan repayment?? If i want deduction u/s 54 i have to deposit with CAPITAL GAIN ACCOUNT SCHEME in the bank.

Agar me capital gain amount loan repayment ke against adjust kar sakta to har koi aisehi karta... think from govt's point of view... read section 54 again.

M I wrong?

Alok Siddapur (Consultant) (229 Points)
Replied 05 January 2012

Sale of Land is not covered under sec 54. If u want to claim exemption the only section available is sec 54F. If you can tell the purpose for which loan is taken then i can help.