About the Author -
I-5
Preface
It is always said that to win a cricket match whether a test match, one day match or 20-20, a captain needs a good team and the captain should properly handle his team members. Likewise, I have a good team of members in my office and so this has enabled me to concentrate on writing articles on a continuous basis and more regularly since 2012. Taxmann group of publications encouraged me to write articles on a regular basis and in fact moulded me as a result of which I could learn a lot with regard to presentation of facts relevant sections and case laws.
When I was offered the task of revising the popular title and subject “Taxation of Capital Gains” in 2022, I gladly accepted it though that was my maiden attempt in writing a book-that too on an important and quite popular and useful topic of capital gains. The support rendered by the entire team of Taxmann has been astounding. With the confidence gained last year after revising and updating the book, I gladly grabbed the opportunity this time also when it was offered to me.
I sincerely thought that a separate chapter should be devoted to tax planning to be framed and followed as also precautions to be taken when NRIs purchase properties in India so also when they dispose them off. Accordingly, a separate chapter has been written covering various aspects with regard to NRIs, OCIs and PIOs. In fact, NRIs by and large want to discharge their tax liabilities on time but sometimes either the NRIs or purchasers of properties from them land themselves at the receiving end not entirely for fault on the part of either of them. The special chapter, devoted to NRIs, clearly explains in detail and in simple language various aspects not only involved in change in their tax status coupled with tax planning but also with regard to other procedure to be followed in various areas/fields when an NRI returns to India for good.
I-7
The Hon’ble Supreme Court has rendered an important judgment with respect to taxability of capital gains in the hands of the firm when retiring partners were paid off after revaluation of assets by the firm which, in my considered opinion, has lot of tax implications. The ITAT Chennai Bench has also rendered two similar judgments holding that family settlement/arrangement can be extended to companies also. Number of important decisions on various issues pertaining to capital gains have also been rendered by various judicial authorities after last edition was published. All these decisions have been incorporated in suitable places and discussed in a detailed way in this edition.
I once again thank Taxmann group of publications for their excellent support whenever the need was felt by me.
I will be failing in my duty if I do not wholeheartedly express my deep sense of gratitude to my office staff and all people at home who supported me in this interesting assignment of updating the book.
I would like to pass on the advice given to me by a learned judicial member of ITAT when I appeared before him and started citing case laws first. He advised me to marshal the facts first and then refer to the relevant provisions of the Income-tax Act at the relevant point of time , relevant assessment year before taking the assistance of case laws.
It is always better to bear the following basic concepts/principles in mind.
There is no – in fact there can be no - strait jacket formula for any given (ideal or otherwise) situation as factual happenings may differ and even one small difference in facts may completely alter the readymade answer situation. Basic principles taught to us indicate that before analysing a live situation and comparing it with an assumed situation or a decided case-law, first find out as to the facts based on which earlier case was decided and what are the facts obtaining in the live situation and what was the point of law then and what is the point of law now-by point of law what is meant is whether any higher authority has decided the case other way after earlier ruling was given or a decision has been given by a jurisdictional High Court now either way or has there been any amendment subsequent to date of last decision or is there any change in assessment year meaning thereby change in law? The point also to be considered is – Any change in the thinking of the persons who matter most-the judicial authorities?
I-8
So, it is better to understand and analyse the facts in the given situation before applying case laws facts obtaining in the case already decided by judicial authorities.
S. KRISHNANI-9
PAGE About the Author I-5 Preface I-7 Contents I-15 CHAPTER 1 : WHICH INCOME IS TAXABLE UNDER THE HEAD “CAPITAL GAINS”? 1 CHAPTER 2 : WHAT IS “CAPITAL ASSET”? 9 CHAPTER 3 : TYPES OF CAPITAL ASSETS: SHORT-TERM CAPITAL ASSETS AND LONG-TERM CAPITAL ASSETS 104 CHAPTER 4 : WHAT IS TRANSFER? 131 CHAPTER 5 : WHICH TRANSFERS DO NOT GIVE RISE TO TAXABLE CAPITAL GAINS? 318 CHAPTER 6 : YEAR OF TAXABILITY OF CAPITAL GAINS 390 CHAPTER 6A : TAXATION OF UNIT LINKED INSURANCE POLICY 405 CHAPTER 6B : TRANSACTIONS BETWEEN A FIRM AND ITS PARTNERS OR BETWEEN AN AOP/BOI AND ITS MEMBERS 428 CHAPTER 7 : COMPUTATION OF CAPITAL GAINS - SHORT-TERM CAPITAL GAINS AND LONG-TERM CAPITAL GAINS 488 CHAPTER 8 : HOW TO COMPUTE FULL VALUE OF CONSIDERATION 495 CHAPTER 9 : WHAT IS EXPENDITURE ON TRANSFER OF CAPITAL ASSET 549 CHAPTER 10 : WHAT IS COST OF ACQUISITION? 576 CHAPTER 11 : WHAT IS COST OF IMPROVEMENT? 657 CHAPTER 12 : WHAT IS INDEXED COST OF ACQUISITION AND INDEXED COST OF IMPROVEMENT 676 CHAPTER 13 : ROLLOVER DEDUCTION IN RESPECT OF PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE [SECTION 54] 684 CHAPTER 14 : DEDUCTION OF ROLLOVER OF GAIN ON TRANSFER OF LAND USED FOR AGRICULTURAL PURPOSES [SECTION 54B] 777 I-11
Chapter-heads
CHAPTER 15 : ROLLOVER DEDUCTION IN RESPECT OF CAPITAL GAIN ON COMPULSORY ACQUISITION OF LANDS AND BUILDINGS [SECTION 54D]
CHAPTER 16 : ROLLOVER DEDUCTION IN RESPECT OF INVESTMENT OF LONG-TERM CAPITAL GAINS FROM LAND OR BUILDING OR BOTH IN SPECIFIED BONDS [SECTION 54EC]
CHAPTER 16A : SHOULD THERE BE TABOO IN INVESTMENT IN NAME OF RELATIVES FOR SECS. 54, 54B AND 54F EXEMPTIONS?
CHAPTER 16B : NRIs AND TAXATION OF THEIR INCOME - A BRIEF NOTE
CHAPTER 17 : CAPITAL GAINS NOT TO BE CHARGED ON INVESTMENT IN UNITS OF A SPECIFIED FUND
CHAPTER 18 : DEDUCTION IN RESPECT OF LONG-TERM CAPITAL GAIN INVESTED IN RESIDENTIAL HOUSE [SECTION 54F]
CHAPTER 19 : TAX INCENTIVES FOR TRANSFER OF ASSETS ON SHIFTING OF INDUSTRIAL UNDERTAKINGS FROM URBAN AREA/SHIFTING OF INDUSTRIAL UNDERTAKING FROM URBAN AREA TO ANY SPECIAL ECONOMIC ZONE (SEZ) [SECTION 54G/54GA]
CHAPTER 20 : TAX EXEMPTION FOR CAPITAL GAINS FROM SALE OF RESIDENTIAL PROPERTY IF INVESTED IN CAPITAL OF START-UP COMPANY [SECTION 54GB]
PAGE
804
821
838
852
875
879
956
974 CHAPTER 21
CLAIMING DEDUCTIONS 988 CHAPTER 22 : TAX COMPUTATION IN RESPECT OF STCG 990 CHAPTER 23 : TAX COMPUTATION IN CASE OF LONG-TERM CAPITAL GAINS 992 CHAPTER 24 : LONG-TERM CAPITAL GAINS TAX ON LISTED EQUITY SHARES, UNITS OF EQUITY-ORIENTED MUTUAL FUNDS AND UNITS OF BUSINESS TRUSTS 996 CHAPTER 25 : REFERENCE TO VALUATION OFFICER 1063 CHAPTER 26 : LOSS UNDER THE HEAD “CAPITAL GAINS” 1078 CHAPTER 27 : DISTRIBUTION OF ASSETS BY COMPANIES IN LIQUIDATION 1089 CHAPTER 28 : HOW TO COMPUTE CAPITAL GAINS IN CASE OF BUY-BACK OF SHARES/SPECIFIED SECURITIES 1101 CHAPTER 29 : CAPITAL GAIN AND DEPRECIABLE ASSETS 1108 CHAPTER 30 : SLUMP SALE [SECTION 50B] 1122 CHAPTER 31 : CAPITAL GAIN ON INTANGIBLE ASSETS 1151 CHAPTER 32 : CHARITABLE TRUST AND CAPITAL GAINS 1161 CHAPTER 33 : CAPITAL GAIN IN REAL ESTATE TRANSACTIONS 1170 I-12
: POWER OF CBDT TO RELAX ANY REQUIREMENT FOR
APPENDICES
APPENDIX 1 : TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020
APPENDIX 2 : SECTION 3 OF THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020 - RELAXATION OF CERTAIN PROVISIONS OF SPECIFIED ACTS - NOTIFIED DATES FOR EXTENSION OF DUE DATES OF VARIOUS COMPLETIONS OR COMPLIANCES UNDER SPECIFIED ACTS
APPENDIX 3 : EXTENSION OF TIME LIMIT FOR COMPLIANCE TO BE MADE FOR CLAIMING ANY EXEMPTION UNDER SECTIONS 54 TO 54GB OF THE INCOME-TAX ACT, 1961 IN VIEW OF THE THEN-COVID-19 PANDEMIC
1211
1228
PAGE
1230 I-13
Contents About the Author I-5 Preface I-7 Chapter-heads I-11 1 WHICH INCOME IS TAXABLE UNDER THE HEAD “CAPITAL GAINS”? 1.0 1 1.1 1 1.2 2 1.3 5 1.4 7 2 WHAT IS “CAPITAL ASSET”? 2.1 14 9 2.2 14 9 2.3 13 2.4 43 2.4A 43 2.5 46 I-15
2.6 48 2.7 48 2.8 49 2.9 50 2.10i 66 2.11 ii 14 67 2.12 70 2.13 vi 14 101 2.14 102 2.15 103 2.16 103 3 TYPES OF CAPITAL ASSETS: SHORT-TERM CAPITAL ASSETS AND LONG-TERM CAPITAL ASSETS 3.1 104 3.2 42A 42A 107 3.3 107 3.4 108 3.5 108 3.6 109 3.7 124 3.8 125 3.9 129 I-16
WHAT IS TRANSFER?
4
4.1 131 4.2 47 131 4.2A133 4.3 i.e., 152 4.4 152 4.5 153 4.6 153 4.7 154 4.8 156 4.9 166 4.10 166 4.11 184 4.12 229 4.13 230 4.14 230 4.15 233 4.16 234 4.17 234 4.18 234 4.19 234 4.20 277 4.21 281 4.22 285 I-17
5 WHICH TRANSFERS DO NOT GIVE RISE TO TAXABLE CAPITAL GAINS? 5.1 318 5.2 325 5.3 326 5.4 330 5.5 - 341 5.6 - 344 5.7 - 344 5.8 344 5.9 347 5.10 347 5.11 348 5.12 349 5.13 viia 351 5.14 viiaa 351 5.14A viiab 352 5.14B viiac 353 5.14C viiad 353 5.14D 355 I-18
5.14E viiaf 355 5.15 viib 355 5.16 ix 356 5.17 x 357 5.18 xa 358 5.19/ 20 xb 358 5.21 xiii 358 5.22 xiii 368 5.23 xiiia 368 5.24 369 5.25 xiiib 369 5.26 xiv 383 5.27 385 5.28 i.e.,xvi 385 5.28A vis-à-vis 388 5.29 xvii 388 5.30 xviii 389 5.31 xix 389 6 YEAR OF TAXABILITY OF CAPITAL GAINS 6.1 390 I-19
6.2 391 6.3 393 6.4 394 6.5 394 6.6 395 6.6A 395 6.6B 395 6.7 395 6.8 395 6.9 - 399 6.10 400 6.11 401 6.12 401 6.13 401 6A TAXATION OF UNIT LINKED INSURANCE POLICY 6A.1 405 6A.2 407 6A.3 i.e., 410 6A.4 i.e., 410 6A.5 413 6A.6 ` 414 I-20
6A.7 414 6A.8 ` 415 6A.9 ` 416 6A.10 417 6A.10A ` ` 10D 418 6A.11 419 6A.12 10D 421 6A.13 423 6A.14 425 6A.15 425 6A.16 426 6B TRANSACTIONS BETWEEN A FIRM AND ITS PARTNERS OR BETWEEN AN AOP/BOI AND ITS MEMBERS 6B.1 428 6B.2 - 432 6B.3 442 6B.4 iii 453 I-21
6B.5 468 6B.6 474 6B.7 477 6B.8 483 6B.9 - 485 6B.10 486 7 COMPUTATION OF CAPITAL GAINS - SHORT-TERM CAPITAL GAINS AND LONG-TERM CAPITAL GAINS 7.1 488 7.2 489 7.3 489 7.4 490 7.5 490 7.6 - 491 8 HOW TO COMPUTE FULL VALUE OF CONSIDERATION 8.1 495 8.2 497 8.3 499 I-22
8.4 502 8.5 505 8.6 525 8.7 526 8.8 529 8.9 533 8.10 534 8.11 - 535 8.11A 535 8.12 536 8.13 537 8.14 538 9
9.1 549 9.2 554 9.3 556 9.4 557 9.5 558 I-23
WHAT IS EXPENDITURE ON TRANSFER OF CAPITAL ASSET
9.6 558 9.7 558 9.8 558 9.9 559 9.10 559 9.11 560 9.12 b i 560 9.13 561 9.14 563 9.15 563 9.16 563 9.17 564 9.18 564 9.19 - 564 9.20 564 9.21 565 9.22 565 9.23 566 9.24 573 9.25 v 573 10
10.0 2 - 576 10.0A 595 10.1 599 10.2 608 I-24
WHAT IS COST OF ACQUISITION?
10.3/4 609 10.5 609 10.6 609 10.7 609 10.8/9 610 10.10 610 10.11 611 10.12 611 10.13 - 611 10.14 612 10.15 612 10.16 nil 613 10.17 614 10.18 639 10.19640 10.20 640 10.21 640 10.22 640 10.22A 642 10.23 642 10.24 b iii 642 10.25 643 10.26 643 I-25
10.27 644 10.28 645 10.29 648 10.30vii viia x 650 10.31 652 10.31A 653 10.32 653 10.33 653 10.34 654 10.35 655 10.36 655 11
11.1 657 11.2 659 11.3 659 11.4 666 11.5 - 669 11.6 - 671 11.7 671 11.8 672 11.9 672 11.10 672 I-26
WHAT IS COST OF IMPROVEMENT?
12 WHAT IS INDEXED COST OF ACQUISITION AND INDEXED COST OF IMPROVEMENT 12.1 676 12.2 - 676 12.3 677 12.4 679 12.5 681 13 ROLLOVER DEDUCTION IN RESPECT OF PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE [SECTION 54] 13.1 684 13.2 698 13.3 698 13.4 729 13.5 731 13.6 733 13.7 734 13.8 735 13.9 735 13.10 736 13.11 768 I-27
DEDUCTION OF ROLLOVER OF GAIN ON TRANSFER OF LAND USED FOR AGRICULTURAL PURPOSES
54B]
ROLLOVER DEDUCTION IN RESPECT OF CAPITAL GAIN ON COMPULSORY ACQUISITION OF LANDS AND BUILDINGS [SECTION 54D]
14
14.1 777 14.2 777 14.3 779 14.4 783 14.5 784 14.6 784 14.7 786 14.8 786 14.9 786 14.10 789 14.11 790 14.12 790 14.13 790 14.14 791
[SECTION
15
15.1 804 15.2 805 15.3 806 I-28
ROLLOVER DEDUCTION IN RESPECT OF INVESTMENT OF LONG-TERM CAPITAL GAINS FROM LAND OR BUILDING OR BOTH IN SPECIFIED BONDS [SECTION 54EC]
15.4 810 15.5 811 15.6 811 15.7 813 15.8 814 15.9 815 15.10 817 15.11 818 15.12 819
16
16.1 821 16.2 822 16.3 ` 825 16.4 829 16.5 829 16.6 829 16.7 832 16.8 833 16.9 833 16.10 834 16.11 835 I-29
SHOULD THERE BE TABOO IN INVESTMENT IN NAME OF RELATIVES FOR SECS. 54, 54B AND 54F EXEMPTIONS?
16.12 836 16.13 837 16.14 837 16A
16A.1 838 16A.2 838 16A.3 840 16A.4 841 16A.5 841 16A.6 842 16A.7 842 16A.8 843 16A.9 844 16A.10 844 16A.11 - 845 16A.12 - 846 16A.13 846 16A.14 - 847 I-30
CAPITAL GAINS NOT TO BE CHARGED ON INVESTMENT IN UNITS OF A SPECIFIED FUND
DEDUCTION IN RESPECT OF LONG-TERM CAPITAL GAIN INVESTED IN RESIDENTIAL HOUSE [SECTION 54F]
16A.15 - 848 16A.16 849 16A.17 849 16A.18 849 16A.19 850 16B
AND TAXATION
INCOME - A BRIEF NOTE 16B.1 852 16B.2 853 16B.3 855 16B.4 856 16B.5 858 16B.6 860 16B.7 861 16B.8 872 16B.9 873
NRIs
OF THEIR
17
17.1 875 17.2 875
18
879 I-31
18.1
18.2 880 18.3 880 18.4 880 18.5 ii 885 18.6 iii 885 18.7 iv 896 18.8 v 900 18.9 902 18.10 904 18.11 905 18.12 905 18.13 - 905 18.14 905 18.15 906 18.16 906 18.17 906 18.18 906 18.19 909 18.20 910 18.21 911 18.22 912 18.23 912 18.24 914 I-32
TAX INCENTIVES FOR TRANSFER OF ASSETS ON SHIFTING OF INDUSTRIAL UNDERTAKINGS FROM URBAN AREA/SHIFTING OF INDUSTRIAL UNDERTAKING FROM URBAN AREA TO ANY SPECIAL ECONOMIC ZONE (SEZ) [SECTION 54G/54GA]
TAX EXEMPTION FOR CAPITAL GAINS FROM SALE OF RESIDENTIAL PROPERTY IF INVESTED IN CAPITAL OF START-UP COMPANY [SECTION 54GB]
19
19.1 956 19.2 958 19.3 958 19.4 959 19.5 964 19.6 964 19.7 967 19.8 969 19.9 970 Annex 19.1 : Explanation 971 20
20.1 974 20.2 974 20.3 977 I-33
20.4 977 20.5 - 978 20.6 979 20.6A 980 20.7 984 21 POWER OF CBDT TO RELAX ANY REQUIREMENT FOR CLAIMING DEDUCTIONS 21.1 c 988 21.2 c 988 21.3 989 22 TAX COMPUTATION IN RESPECT OF STCG 22.1 990 22.2 991 23 TAX COMPUTATION IN CASE OF LONG-TERM CAPITAL GAINS 23.1 992 23.2 992 23.3 994 23.4 - 994 I-34
24
CAPITAL GAINS TAX ON LISTED EQUITY SHARES, UNITS OF EQUITY-ORIENTED MUTUAL FUNDS AND UNITS OF BUSINESS TRUSTS 24.1 996 24.2 996 24.3 999 24.4 999 24.5 1000 24.6 1001 24.7 1002 24.8 1003 24.9 1004 24.10 1006 24.11 1008 24.12 b 1015 24.13 c 1021 24.14 d 1021 24.15 e 1023 24.16 1029 24.17 1048 24.18 qua 1054 24.19 1055 24.20 1055 24.21 1060 24.22 1062 I-35
LONG-TERM
25
TO VALUATION OFFICER 25.1 1063 25.2 1066 25.3 1067 25.4 1068 25.5 1072 25.6 1072 25.7 1074 25.8 1074 25.9 1074 25.10 1075 25.11 1076 25.12 1076 25.13 1077 25.14 1077 26 LOSS UNDER THE HEAD “CAPITAL GAINS” 26.1 1078 26.2 1079 26.3 1083 26.4 1085 26.5 1086 26.6 22 1087 26.7 1087 I-36
REFERENCE
27
OF ASSETS BY COMPANIES IN LIQUIDATION 27.0 1089 27.1 1089 27.2 1089 27.3 1090 27.4 1091 27.5 - 1091 27.6 1092 27.7 1095 27.8 1095 28
DISTRIBUTION
28.1 1101 28.2 1101 28.3 1103 28.4 1104 29 CAPITAL GAIN AND DEPRECIABLE ASSETS 29.1 1108 29.2 1109 29.3 1114 29.4 1115 29.5 1118 29.6 1121 I-37
HOW TO COMPUTE CAPITAL GAINS IN CASE OF BUY-BACK OF SHARES/SPECIFIED SECURITIES
30
30.1 1122 30.2 - 1122 30.3 1124 30.4 1125 30.5 1126 30.6 1126 30.7 1128 30.8 1129 30.9 1134 30.10 1140 30.11 1144 30.12 42C vis-à-vis 1146 30.13 1149 30.14 1150 31
SLUMP SALE [SECTION 50B]
31.1 1151 31.2 1154 31.3 1154 31.4 1154 31.5 1155 31.6 1156 31.7 1156 31.8 1158 I-38
CAPITAL GAIN ON INTANGIBLE ASSETS
31.9 1158 31.10 1159 31.11 1159 31.12 1159 31.13 1159 31.14 1160 32 CHARITABLE TRUST AND CAPITAL GAINS 32.1 1161 32.2 a 1161 32.3 b 1162 32.4 1163 32.5 1164 32.6 1164 32.7 1166 32.8 1167 32.9 1168 32.10 1168 33 CAPITAL GAIN IN REAL ESTATE TRANSACTIONS 33.1 1170 33.2 1170 33.2A - 1171 33.3 1178 33.4 ` 1178 I-39
APPENDICES
33.5 1182 33.6 1182 33.7 1189 33.8 1189 33.9 1190 33.10 1191 33.11 vis-a-vis 1191 33.12 1191 33.13 1193 33.14 1194 33.15 1195 33.16 1195 33.17 1195 33.18 1196 33.19 1198 33.20 1199 33.21 1200 33.22 1201
APPENDIX 1: 1211 APPENDIX 2: 1228 APPENDIX 3: 1230 I-40
13
CHAPTER
ROLLOVER DEDUCTION IN RESPECT OF PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE [SECTION 54]
684
13.1 PROVISIONS OF SECTION 54 IN A NUTSHELL
Para 13.1-1
`
` `
Para 13.1-2
13.1-1 Regular scheme for claiming deduction u/s 54 by investing capital gains from old house in one residential house in India How to compute capital gains
one residential house in India
c Taxation
and Other Laws Relaxation and Amendment of Certain Provisions Act, 2020; Notification No. 35/2020, dated 24.06.2020 as corrected by Corrigendum Notification No. 39/2020, dated 29.06.2020] -
See Appendix
685 Para 13.1 ` ` `
c
see Para 13.5
see para 13.5
See Chapter 21.
13.1-2 Once-in-a-lifetime benefit of exemption for long-term capital gains from sale of a residential house by investment in 2 residential houses in India
Para 13.1 686
-
`
See Chapter 21 13.1-2A Amendment by the Finance Act, 2023
687 Para 13.1 13.1-1
` ` ` ` `-vii
13.1-3 FAQs on once-in-a-lifetime benefit under section 54 to claim deduction for investment in 2 houses
Will this benefit under section 54 apply to long-term capital gains from sale of residential plot?
Whether transferred house may even be situated abroad?
What if two or more houses sold and resultant capital gains in total is not exceeding ` 2 crores, can the same be invested in two houses in India to avail this one-time opportunity?
Suppose resulting capital gains from sale of a residential house is 1.95 cr. Assessee buys 3 houses in India. House A - ` 1.25 cr. House B - ` 40 lakhs. House C- ` 35 lakhs. What happens?
Para 13.1 688 `
`
` ` ` ` `
Para 13.1
I have sold my old residential house in the month of November 2018 and resultant long-term capital gains is ` 1.75 cr. I have purchased a new house for ` 1.25 cr. Can I avail the benefit announced in budget by investing balance ` 50 lakhs in another residential house on or before 31.03.2019?
I have entered into agreement of sale dated 15/01/2019 to sell my old residential house and received 20% of consideration in bayana (earnest money) advance which will result in long-term capital gains will be ` 1.80 cr. Both parties have to fulfil their respective parts of the deal (payment of balance amount by buyer and executing sale deed and giving vacant possession by seller) within 3 months i.e., on or before 15.04.2019. I have utilized advance amount received and home loan to buy a new house for ` 1.40 crores and will get vacant possession of the same by February end and my renovation work on new house will be over by March 25th and then I can shift there. Will I be eligible for exemption of balance of ` 40 lakhs long-term capital gains if I invest in a new house?
689
`
bayana
47 v-
Smt. Madhu Gangwani Asstt. CIT
Para 13.1
690
I have sold my residential house in Delhi for ` 3 crores and the resultant long-term capital gains is ` 1.95 crores. The agreement for sale was entered into with the buyer on 15.01.2019 and advance amount of ` 1.5 crores was received from buyer by cheque. With the help of the advance amount, new house was purchased in Delhi for ` 1.5 crores on 01.03.2019. Balance amount of ` 1.5 crores was received on 29.03.2019 and registry in buyer’s name was effected and possession was handed over to him on that date. Investment made in another flat in Haryana of ` 50 lakhs on 30.03.2019. Will my capital gains be tax-free on the basis of the amended section 54?
What if in above example, the sale deed in buyer’s name is executed and registered on 02.04.2019 and possession handed over to him on that date?
What if capital gains from transfer of old residential house is ` 2.5 crores and seller invests ` 2 cr in 2 residential houses in India and balance ` 50 lakhs in specified bonds under section 54EC?
Whether relief will be available in old residential house abroad is sold and resultant long-term capital gains not exceeding ` 2 crores is invested in 2 houses in India?
`` `
` `
` ` `
691
Para 13.1
Would the tax benefit be lost if total cost of both the houses in India in which capital gain is invested exceeds ` 2 cr?
Resultant long-term capital gains from sale of old house is ` 1.5 cr. The total investment in both houses in India is ` 1.3 crores. Can the balance capital gains of ` 20 lakhs be invested in section 54EC bonds to avail deduction under that section?
Suppose Mr. X is selling his old house and sale consideration is ` 4.5 crores. The indexed cost of acquisition comes to 2 cr. As capital gain comes to ` 2.5 cr, Mr. X wants your advice whether he can show that out of the 4.5 cr, ` 60 lakhs were for sale of furniture, air-conditioners, geysers and fittings in the house which the buyer of house is willing to buy from him. Also, this would reduce stamp duty according to him?
Paramjit Singh`
-
`
`
-
ITO
13.1-4 Three ITAT Decisions
a Devinder Kumar ITO
Sudarshan Aluvala supra
Para 13.1 692
-
`
b Sudarshan Aluvala ITO
c Sri. Neelakantan Pushkaran ITO
TAXATION OF CAPITAL GAINS
AUTHOR : S. KRISHNAN
PUBLISHER : TAXMANN
DATE OF PUBLICATION : APRIL 2023
EDITION : 12th Edition
ISBN NO : 9789356227118
NO. OF PAGES : 1270
BINDING TYPE : PAPERBACK
DESCRIPTION
Rs. 2695 USD 69
This book provides an in-depth, thorough & chapter-wise analysis of each aspect of capital gains, with the help of ‘relevant’ judicial pronouncements, Circulars & Notifications, illustrations, etc. The book aims to enable professionals for the following:
• Understand various concepts/issues on capital gain
• Guidance on following the proper procedure in reporting the correct income
The Present Publication is the 12th Edition and has been amended by the Finance Act 2023. This book is authored by CA S. Krishnan with the following noteworthy features:
• [Exhaustive Analysis on Tax Planning within the Four Corners of the Law] based on the family settlement and arrangement. Included in the discussion are two similar judgments rendered by the ITAT Chennai wherein it has been held that family settlement/ arrangement can be extended to companies also
• [Pros & Cons of Exemption Claims made u/s 54, 54B and 54F] for the investment made in the name of relatives from funds emanating out of transfer of capital asset
• [Covering Taxability in Dissolution or Reconstitution of Firm] post-2021 amendments to section 45 and other related sections with well-laid examples. Included in the discussion is the important decision of the Hon’ble Supreme Court in the case of CIT v. Mansukh Dyeing and Printing Mills [2022] 145 taxmann.com 151 (SC)
• [Transfer of Capital Assets w.r.t. NRIs] It explains the procedure to be adopted in such cases with the help of case laws
• [Discussion on Various Provisions of RFCTLARR Act 2013] It also analyzes the various provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013
• [Taxability of Interest received on Compensation on Acquisition of Agricultural Land] has been discussed with the help of various judicial decisions
ORDER NOW