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section 54 of income tax act

31 July 2019

Can an assessee claim benefit under section 54 if they sold two house property and wants to buy one house property? If yes then what are the requirement for claiming exemption under section 54.

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15 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178065 Points)
Replied 01 August 2019

Yes, he can. The aggregate LTCG amount is to be invested in One house property in India.

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Himani Jindal (23 Points)
Replied 01 August 2019

but there is a one condition u/s 54 that the income of such property should be chargeable under the head income from house property.. what it means??

nitin dhage (56 Points)
Replied 06 August 2019

Hello Team

Need your help/suggestion.

I have given my property on development agreement to the builder. I have received two flats as my share in this development agreement.

I have retained these flats for my self possession. I have calculated the Capital Gains on my property basis indexed value of year 2001 and sub registrar market valuation of the property of year 2001 ( Flat was actually purchased by me in the year 1984, hence, 2001 Base Index Value is considered). And I have considered the market value of the flat as per the sale price of flat sold by the builder from his share (Date of sale is the same date of Occupancy certificate received from the municipal authorities).

By doing the above calculation there is a Capital Gains coming up on the full overall property valuation (Two Flats). I would like to know do I have to pay the capital gains tax on this transaction or is there any exemption allowed ?

I have retained these two flats for my self possession and there is no sale or monetary transaction involved in my agreement. So I am of the opinion that there is No Capital Gains Tax applicable on this transaction.

I have received two units (two flats) in this agreement, both are retained for self post.

I need your expertise help and assistance to know if I have to pay any Capital Gains Tax or is it exempted as there is no sale involved, though I received two units (two flats) by giving one unit in development agreement with builder.

Thanks and regards

Nitin

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178065 Points)
Replied 06 August 2019

When was the development agreement registered? or the possession of land given for development?

nitin dhage (56 Points)
Replied 07 August 2019

Hello Sir, the DGPA was registered at SRO on 1st April 2016. Supplementary Agreement was registered with SRO on 6th April 2017 (with flat allotment details) and the Occupancy Certificate received from Municipal Corporation is on 8th October 2018. Thanks.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178065 Points)
Replied 07 August 2019

As per the registered agreement on 01.04.2016, the amendment to sec 45(5A) which is effective for JDAs entered into on or after 01.04.2017: the capital gains liability has arose in AY 2017-18 and not at the time of completion certificate.

nitin dhage (56 Points)
Replied 07 August 2019

Hello Sir, I was advised that the IT returns are to be filed once the Occupancy Certificate is received from the Municipal Corporation, hence, I did not file the returns earlier. We have received the Occupancy Certificate on 8th October 2018, hence, was planning to progress with filing the returns. Kindly advise on how to deal further. Thanks Nitin

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178065 Points)
Replied 08 August 2019

Depending upon your eligibility for exemption u/s. 54F (if development agreement was for land) as on 01.04.2016; your capital gain tax liability would have been reduced to nil.

nitin dhage (56 Points)
Replied 08 August 2019

Sir, We had three old 2BhK flats, hence, have entered into DGPA with Builder to get new flats. we already had the structure which was in use and occupied by us, due to DGPA we demolished it and got two new flats for self possession, no sale/ monetory transactiona were involved. Kindly advise can we file the returns now and claim that it is exempted from Capital Gains tax as it is for self possession. Your help/suggestion would be appreciated. Thanks.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178065 Points)
Replied 08 August 2019

As per my opinion, the declaration should have been made in AY 2017-18. But you are advised otherwise. so there I cannot help.

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nitin dhage (56 Points)
Replied 08 August 2019

Sir now the declaration was not made in AY 2017-2018 and I am planning to do it now in AY 2019-2020, hence, kindly advise the way forward. Thanks

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178065 Points)
Replied 08 August 2019

When I can't see any capital gain in AY 2019-20, how can I claim any exemption?

nitin dhage (56 Points)
Replied 09 August 2019

Sir, in my scenario as capital gains was not disclosed in AY 2017-18 so does it mean that I cannot disclose/ show the capital gains and claim exemption in the AY 2019-20 by filing IT returns. I am worried will there be any notice coming from IT department for not disclosing the capital gains in my IT returns. Hence, kindly guide me how to deal with this situation. Many thanks in advance for your kind reverts and suggestions.