property sale through GPA-how to file tax return to avail LTCG

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  1. dsriram

    dsriram New Member

    Sir / Madam,

    My mother 73 years undertook the following transaction. i need advice on how to reflect it in the IT return to avail LTCG benefit

    1. My mother executed a non-registered "agreement for sale" for a flat with Mr A in Feb 2015 for full consideration of Rs 12 lakhs.
    2. She then executed a registered GPA (Rs 100 stamp paper) to Mr A to undertake sale of the said plot on her behalf in Mar 2015. In view of this the GPA does not reflect payment of for full consideration of 12 lakhs nor stamp duty value of the property.
    2. My mother immediately invested the entire Rs 12 Lakhs in REC sec 54EC CG bond to avail LTCG in Feb 2015 itself
    3. Mr A sold the plot for 16 lakhs to Mr C in Jul 2015 and executed a sale deed as GPA holder. (Govt valuation of the plot is 18 Lakhs)

    I understand sale through GPA is not a valid transfer of ownership.
    (a) In this case can the LTCG be availed
    (b) if so, which of the above info need to be used. and
    (c) In which FY should the transaction be reflected.

    Kindly advice me on how to resolve this issue.

    Warm Regards
    Sriram
     
    Last edited: Jun 30, 2016
  2. ZED

    ZED Well-Known Member

    If the asset was a long term capital asset (i.e. it was held for a period of 3 years or more) then exemption can be claimed u/s 54EC.


    1 .How much is reflected?
    2. What is the stamp duty Value of the property?


    We are not concerned with the value at which the property was sold by Mr.A. We are only considered with the value of consideration accruing to your mother ,and also the stamp duty value (as asked in previous paragraph)

    F.Y 2014-15
     
  3. dsriram

    dsriram New Member

    She executed a registered GPA (Rs 100 stamp paper) to Mr A to undertake sale of the said plot on her behalf in Mar 2015. In view of this the GPA does not reflect payment of for full consideration of 12 lakhs nor stamp duty value of the property.
     
  4. ZED

    ZED Well-Known Member

    I specifically asked for the stamp duty value because under Income Tax Act, we have a special provision ,S.50C ,according to which if the stamp duty value is more than the consideration then stamp duty value is to be taken.

    As soon as GPA was executed, the transfer has taken place.
    Now I will compare the consideration with the stamp duty value to arrive at sales consideration for the purpose of computing capital gain.

    You had mentioned that (Govt valuation of the plot is 18 Lakhs)
    But you mentioned this in point c which pertains to next financial year.

    If the stamp duty value was the same in previous financial year also (when GPA was executed/ agreement to sale was signed) then , for the purpose of computing capital gain the value shall be taken as 18 Lakhs and not 12 Lakhs.

    Not just that, but there appears to be a critical mistake aswell owing to which Even if the gain has been invested its possible that exemption might not be available in this case. I will need more details.


    For detailed discussion you may contact me at my mail address
    [email protected]
     
  5. dsriram

    dsriram New Member

    Thank you very much. I shall get back to you on your email if i have any further issues. Regards
     
    ZED likes this.
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