Capital gains on residential: ansistorial property

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  1. Darshak9

    Darshak9 New Member

    hi,
    So my mom sold her property belonging to her grandfather bought approx in 1923, so literally the full thing is capital gain, even if I take the guideline value of 1985. The property is a residential property. Now she already has one house in her name, can she construct another house and Claim capital gains. How many houses in this case is she entitled to own? Does section 54f have any effect on us.
    Thank you for your support.
    George mathew.
    [email protected]
     
  2. ZED

    ZED Well-Known Member

    Yes

    You can own any number of houses, its the exemption which is restricted to only 1 residential house in India. If she has 10 houses and sold one and want to construct another one, then yes she can claim exemption. But, if she wants to construct two houses, then she can construct any no. of houses but exemption shall be restricted to only one of the house.


    NO, that is applicable if capital asset is an asset other than a residential house property.

    Kindly refer to the provision for more detail
    54. (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,—

    (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or

    (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain.

    (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :

    Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,—

    (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and

    (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.
     
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