CAPITAL GAIN EXEMPTION

[sameerepari@yahoo.com]

Dear Experts,
Please Suggest me on this:
My Client has sold a land in 2010 but he got advance for the same in the year of 2009 and he purchached a land and started construction in 2009 it self ...my question is whether can he claim any capital gain exemption for this.if so please give me some case laws for the same.

WHAT IS THE DATE OF TRANSFER IN THIS CASE CAN THE DATE OF RECEIPT OF ADVANCE MONEY BE CONSIDERED AS DATE OF TRANSFER?

Thanks..

[ashutosh majumdar]

Dear Experts,
Please Suggest me on this:
My Client has sold a land in 2010 but he got advance for the same in the year of 2009 and he purchached a land and started construction in 2009 it self ...my question is whether can he claim any capital gain exemption for this.if so please give me some case laws for the same.

WHAT IS THE DATE OF TRANSFER IN THIS CASE CAN THE DATE OF RECEIPT OF ADVANCE MONEY BE CONSIDERED AS DATE OF TRANSFER?

Thanks..

On the first question, the answer is (sadly) no. While you get an exemption in respect of residential property, there is nothing with regard to bare land.

On the second question, the date of transfer is when possession is given to the purchaser or when the conveyance is executed, whichever is earlier. The receipt of advance will not be a transfer.

[camanojgupta]

Exemption U/s 54F can be claimed in respect of LTCG arising on transfer of land provided the net consideration is invested in a residential house. The problem in this case is this that the assessee had started construction prior to transfer. If u can prove that at the time of receipt of advance the possession of land was also handede over to buyer, which is very easy, then u have a fair chance to exemption under section 54F

CA MANOJ GUPTA
JODHPUR
09828510543

[subodh]

perhaps some exemption can be availed if the land is 'agricultural'.
please clarify 1st.

[kondapalli]

If the land is 'agricultural',then it is not a capital asset and hence no questio of any 'capital gains'

[probal_shome]

@subodh and @kondapalli, please note Explanation 1 to 2(1A) (which defines agricultural income) which reads as follows:

"Explanation 1. For the removal of doubts, it is hereby declared that revenue derived from land shall not include and shall be deemed never to have included any income arising from the transfer of any land referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of this section"

Section 2(14) defines "capital asset" to mean property of any kind held by an assessee, whether or not connected with his business or profession, but does not include—

(iii)  agricultural land in India, not being land situate—

    (a)  in any area which is comprised within the jurisdiction of a municipality46 (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population46 of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or

    (b)  in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;"

So a gain arising on transfer of agricultural land situated within the prescribed limits is chargeable to tax.