Exemption U/s 54

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Deepak

Student

127 Points Joined January 2009

i had LT Capital Gain on sale of my House Property, i'd Invested the LTCG in New House by claiming exmption U/s 54. later i'd transfer my New HP to my Brother by way of gift 47(iii), there is no transfer as such as per 47(iii). whther there is any CG?

Before answering please note this points:

in order to claim exemption I shud nt TRANSFER the New house Property wid in 3 years from date of purcahse.

47 ( iii) any asset transfer by way of gift shall not be regarded as transfer.

If my Brother sold it, shall i liable to pay tax as deemed owner u/s 27?

Replies (2)

FATEMA

CHARTERED ACCOUNTANT

719 Points Joined March 2009

Deep,

U can claim the exemption u/s 54 because tansfer of capital asset by way of a gift or a will is a transaction which does not fall under transfer.

Juzer Sadikot

CA - innovative solutions for Imports an

1309 Points Joined November 2008

Dear Deep,

Incase you transfer the House property (new asset) which you wer holding for period less than three years to your brother. Section 54 provides that in such case cost of acquisition shall be "nill".

One may also say as you have gifted this property your full value of consideration is also "nill" but it would prove non-sense by looking to provisions of section 50C.

As Section 54 says, incase New asset is transfered, the gain on such transfered shall be chargeble under section 45 considering the cost of acquisitoin as nil.

Further as you have rightly mentioned that section 47(iii) provides that nothing said in section 45 shall apply to transfer of asset by way of gift. In such scenario, In case you have any gain by virtue of provision of section 54 (Which shall ultimately routed through section 45) section 47(iii) takes care of its non taxability in Capital Gains heads.

So, it looks like, there shall be no tax issues in this transaction.

Thanks and Regards

Juzer