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Gain from property

04 September 2021

I have sold my one property worth Rs 10 lakh and buy another property worth Rs 12 lakh but for this purpose I have taken entire amount from bank loan . what will be effect of capital gain in this case . property sold after 3 yr so long term capital gain.
plz guide

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7 Replies

Kiran Hathalia (837 Points)
Replied 04 September 2021

Residential property?

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Mahesh Sarda (77 Points)
Replied 04 September 2021

Open plot sold and bought residential property

Kiran Hathalia (837 Points)
Replied 04 September 2021

If you would have used the gain arising from sale of plot to buy residential house property, then the gain would have been exempt u/s 54F subject to certain conditions. But in this case, you have applied for the loan rather than utilising the gain for purchasing new residential property, entire gain shall be chargeable to tax as Long Term Capital gains taxed at 20%.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (184716 Points)
Replied 04 September 2021

No dear,

If the other conditions of the sec . 54F are satisfied, source of fund (here bank loan) would not negate the deduction that he can avail.

Kiran Hathalia (837 Points)
Replied 04 September 2021

Can you provide me the extract stating the same?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (184716 Points)
Replied 04 September 2021

There are many judgements supporting the view.... one of which I state here under....

In Milan Sharad Ruparel vs ACIT [TS-5735-ITAT-2008(MUMBAI)-O], the Mumbai ITAT noted that:

“The law does not expect that the sale amount should be kept in the locker and the same should be utilized in purchase of residential house. Neither the law nor does any circular require the identity of the amount received on sale and utilization for purpose of s. 54F and other relevant provisions. Since money has no colour, all that is required is compliance with the condition of investment within the specified time”

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