section 54

[jagannat]

sir,
am an engineer. need some clarifications on following matter.
a. purchased a house in aug 2003 for Rs. 22lakhs
b. sold the same in apr 2008 for 43lakhs.
c. bought a new flat for a total cost of   Rs. 38 lakhs in a newly constructed building by a reputed corporate builder with date of allotment sept.2008. date of  scheduled possession jan 2012.
d.mistakenly  kept in FD sale amount in scheduled bank like HDFC.
e. been paying the instalments from this account. flat registered & stamp duty paid.
f. possession is delayed due to NOC and will be ready by dec2011. residual amount to be paid is Rs.4lakhs on final possession.

want to know the following
a. will i be allowed under long term capital gains.
b. will it be on the residual amount
c. what will be the tax liability.
d. will the entire sale amount will be added to my income for FY 2009-09.
e. how does IT officer will assess the whole case.
f. what will be the interest & penalty to be paid.
g. in case the demand is for higher amount, is there any merit in going for appeal say until tribunal.
h. is there any judgement to support the case.

highly confused

regards
pj

[cagauravgoyal]

Hi Jagannat
In normal circumstances of your case taxable capital gain of Rs. 15 lacs (approximately) after indexation in FY 2008-09.
For exemption u/s 54 we have the following options:-
      Amount of capital gain will be reinvested in new residential house with in two years or new house will be constructed in 3 years from date of sale of house.

     The amount will be invested in Capital Gain Account Scheme of notified bank as per notification of Income Tax upto due date of filling of return with department.

Now in your case,
U have booked a residential property worth Rs. 38 lacs. Whatever amount you have paid to contractor before the filling of return of FY 2008-09, can be claimed as deduction in return of FY 2008-09 itself. The payment made to contractor after filling of return of income of FY 2008-09 can not be claimed as exemption. The only way to claim exemption is to deposit the balance amount in capital gain account scheme as notified by the board. In your case u have deposited amount in FD account, Hence in my opinion exemption will not be available to you and tax liability will arise for FY 2008-09