Mr. X purchased one residential house on 01.04.2002 for `5,00,000. This house was
acquired compulsorily by the Government on 01.10.2013 and compensation of `50,00,000 was fixed by the
government but the amount was paid by the Government on 01.03.2019. The assessee has purchased one
residential house on 01.01.2019 for `2,00,000 and the house was sold by him on 01.01.2020 for `4,00,000.
Compute his tax liability for the assessment year 2019-20 and also capital gains for the various years?
here from which date the asset should be purchased within 2 years as per sec 54?
To become long term capital asset, assesee should hold HP for more than 2 year. If holding period is less than 2, it is short term.
Now Let's see first about the purchase of new residential house on 01.01.2019 for 2 lacs and sold the same on 01.01.2020 for 4 lacs. Since Holding period is less than 2 years, it is short term and u need to pay tax on 2 lacs gain (4-2) as per ur applicable income tax slab rate.
Regarding compulsory acquisition, as per sec 45(5), capital gain will only be taxed in the year of receipt of compensation. So, calculate LTCG and tax it in FY 18-19 or AY 19-20 because u received it in March 2019. Ur capital gain only arise in AY 19-20. U need not worry about CG of previous years.. And as per sec 54H, it is enough if u buy property within 2 years from date of receipt of compensation i.e on or before 01.03.2021.
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