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query on Capital gain

niki_1079 (CA Practice ) (279 Points)

17 April 2010

Hi All

I have a query, pls clarify me:

let suppose Mr X sold his house for 85L. Then he purchased another house for 55L in his wife's name. Is he eligible to get exemption U/s 54.

And if he purchased the house earlier for 15 L then CG would be 85L-15L=70L. And as he purchsed the house for 55L the taxble CG would be 70L-55L=15L. Is this calculation correct.

Thanx in advance.

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5 Replies

Amir (Learner) (4016 Points)
Replied 17 April 2010

Dear Niki,

1) Sec 54 - It is not necessary that new House should be in the name of the assessee. [But this doesn't hold good in case of Sec 54F]

Purchase’ does not mean that the new house must be registered in assessee’s name - For the purpose of attracting the provisions of section 54, it is not necessary that the assessee should become the owner of the property purchased. The word ‘purchase’ occurring in section 54(1) has to be given its common meaning, viz., buy for a price or equivalent of price by payment in kind or adjustment towards a debt or for other monetary consideration. Therefore, for the purpose of applicability of section 54, registration of the document is not imperative - Balraj v. CIT (Delhi).

2) Computation is correct provided u din't forget to indexed the COA {In addition to this COI & Expenses on Transfer can also be deducted}

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Murli Punjabi (Sales) (22 Points)
Replied 18 April 2010

Utmost urgent Please & thanks a lot in advance.

An NRI selling his share of property, purchased in 1983 from his NRE Bank a/c, is TDS applicable, if so what is the payable rate & on what amount, I mean how to calculate the same, with deductions if any.

Also if the TDS is refundable, having a Pan card, never filed any returns as an NRI.

Thanks

Mike

CA Babit Khurana (learning is my passion) (338 Points)
Replied 18 April 2010

Property is not covered in any setion from 192-196D basically tds sections, so tds is not applicable in this case.

niki_1079 (CA Practice ) (279 Points)
Replied 19 April 2010

Thanx a lot Amir for your reply.

So does it means that if Mr X purchased new house in his wife's name, he will be eligible for deduction U/s 54.

Amir (Learner) (4016 Points)
Replied 19 April 2010

Dear Niki,

The judgment which I quoted indicates in that direction only.

And there is more thing that in cases of Exemptions, courts generally takes a linient view as far as procedural aspects is concerned so that maximum benefit can be extended...

So I think exemption will not be denied....