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Capital gains imp

CA ANSHUL DOKANIA (CHARTERED ACCOUNTANT) (196 Points)

15 March 2013

Suppose A sold equity shares of a private limited company on 18/12/2012

sales consideration=10947469

indexed cost of acquisiton=1898358

so LTCG= 9049111.

Now to avoid capital gain tax,

A wants to invest Rs.50 lacs u/s 54EC(NHAIbonds) during march 2013

Rs.40.49 lacs u/s 54EC(NHAI Bonds) during April 2013.

My question is =How it will be reflected in the income tax return of the assessee for ASST YEAR 2013-14.?Whether whole deduction u/s 54EC to be taken in Asst year 2013-14 or 40 lacs during 2014-15 as the financial year changes.?

Because u/s 54EC maximum deduction is of Rs 50 Lacs during a financial year.

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4 Replies

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 15 March 2013

It shall be shown in AY 2013-14 only.

Since the section 54EC talks about investment in a financial year.

But 54EC(1)(a) uses the expression "if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged".

Meaning thereby, whole amount of exemption(i.e.90.49 Lakhs) shall be available in AY 2013-14 itself, since in this case the investment is upto Rs. 50 Lakhs in both the FYs. Further, the amount of cost of the specified asset hsa been paid within 6 months of transfer only.

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CA Deepak Rathore (EXPERT) (281 Points)
Replied 15 March 2013

Yeah you can take whole

claim Section 54 EC following conditions is to be satisfied.

Long Term Capital Asset Long term assets means any capital asset held by assessee for more than 3 Years.
If assesee has sold the Long term capital asset during the previous year and made a long term capital gain then he can invest money of capital gain in Capital gain bonds and can save tax on long term capital gain.
Assessee here means all type of assessees,like individual,firm company etc.
Amount to be invested in bonds is only capital gain not net consideration received on sale of long term capital asset
Amount exempted under this section will be amount of capital gain or amount invested in capital gain bond which ever is lower maximum up to 50Lakh(see note below)
These Bonds Maturity Period is Three years
Capital gain bonds eligible under this section are now can be issued only by REC or NABARD
Bonds can not be pledged ,sold transfer before completion of three year from purchase of bonds ,and in case its transferred then amount capital gain exempted on investment in these bonds will be made taxable in that previous year as Long term capital gain .
Amount of capital gain should be invested in Capital gain bond within 6 Month from date of transfer/sale of capital asset .