Hi, I sold a residential land in Bangalore 2016 (which gave me a long-term capital gain of around 35L after including the cost inflation index between 2009 and 2016) and purchased a house in Hyderabad for a registration value of 42L. I also have another apartment (purchased in year 2009) in my name, i am planning to sell this apartment which will give me a capital gain of around 5L including cost inflation index. Q1) Can i combine these two capital gains and claim tax free under section 54 of already purchased house at Hyderabad? i mean can i show the capital gain of 35L+5L=40L i used to purchase house value of 42L at Hyderabad? Q2) My other query is that, i have not yet sold my apartment, Do i have to sell it within this financial year (before march 2017) or in the next financial year (after april 2017)? Please suggest me. Post your suggestion is shall decide whether to sell my apartment now or after april 2017?
Dear Sir,
1. Yes, you can do so. Refer the following judgement.
https://indiankanoon.org/doc/130655916/?type=print
2. To answer this question, we need to have hold on complete facts like cost of purchase , date of purchase etc.
Please feel free to call/ revert in case of any doubts
Thanks and Regards
Abhishek Dugar
CA CS B.Com
Hi, Thank you for the reply. My second question is related to the sequence of transactions in the financial year. Does that matter? 1. Purchased residential land on 3rd March 2010 for 8.4L on my mothers name, which then gifted to me on Aug 12th 2016. On Sep 1st 2016 (within a month) sold this land for a cost of 49L. 2. On Dec 9th 2016 (within three months) purchased a house in Hyderabad for a registration cost of 42L. 3. Now, in the month of march 2017 (say March 1st 2017) if i sell my other apartment for 23.5L (which i purchased on May 30th 2009 for an amount of 10.7L), can this be considered? Does the sequence of the transactions matter? or only overall transactions executed in the financial year matters (without the order of execution?) Can you please share with the actual capital gains (in figures since the year of purchase and selling is shared)? Thanking you in advance.
Dear Sir,
Sequence of transaction does not matter as soon as you satisfy the conditoons of section 54. But in first question you said that you have sold a land. In that case section 54 will not apply. Section 54 applies in case of house property and not in case of only land. If it is a land section 54f will apply
Will share the calculation shortly.
Please feel free to call/revert in case of any doubts
Thanks and Regards
Abhishek Dugar
CA CS B.Com
1. You cannot club the sale of two properties and claim exemption U/s. 54F.
2. The first property sale and purchase of new property qualifies for exemption. For second property you can purchase or deposit in Bonds to claim exemption.
3. All the above two transactions shall be considered individually and tax and exemption to be decided.
4. You can sell your property before March 2017.
Thank you Shyam for your reply. As said by you "The first property sale and purchase of new property qualifies for exemption", so for the current financial year i shall use only to claim exemption U/s. 54F and do not sell my apartment before march 2017 (i dont have immediately need to sell and also not to show-up another extra transaction in this current financial year itself). Also read somewhere: Full deduction is allowed (under Section 54F) in cases where the entire sale proceeds are invested in a new house or used to build a new house. If you use a part of the money, the deduction will be proportion of the invested amount to the sale price. Here, in my case sale price of 49L and invested amount is 42L. Any issue you see here? Next year (may be 1st week of April 2017), i shall plan to sell my apartment and then i shall purchase the Bonds to claim exemption. Few more queries please: 1. Will the exemption in the subsequent year possible? i mean section 54F in current financial year and section 54 in next financial year? 2. Is it only the capital gains or full sale value, we should invest in bonds next year? Request to share the bond details in which we should invest? and is it possible for these bonds to purchase online? Thank you in advance.
Yes that is true. If you sell property other than agricultural then the total sale proceeds need to be invested . But in case of sale of residential property i.e. residential property with some structure on it then only the capital gains need to be invested . You can refer Section 54.
1. Yes exemption in subsequent year is possible.
2. You can invest in bonds notified for this purpose like REC, NHAI etc. We should check online as the bonds are issued for a limited period.
Query already in discussion by other experts.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
