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Example Four |
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What would be the amount
of exemption under Section 54 and capital gains chargeable to the
tax in respect of the following transactions:
1. X sells a residential house property in Agra for Rs 15,40,000
on April 23, 2006 which was purchased by him on April 20, 1985 for
Rs 2,90,000. On June 16, 2006, he purchases a house in Delhi for
Rs 12,70,000 for the purpose of residence of his daughter.
2. On July 18, 2007, X sells the house property in Delhi for Rs
16,90,000. Can he claim exemption under Section 54 in respect of
transaction (2)? |
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| Example
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| Example
three |
| Example
four |
| Example
five |
| Example
six |
| Computation of Tax |
| Capital gains in transaction (1) |
Rs |
| Sale proceeds |
15,40,000 |
| Less: Indexed cost of acquisition [ Rs 2,90,000 X 519÷133]
|
11,31,654 |
| Capital Gains |
4,08,346 |
| Less: Exemption under Section 54 |
4,08,346* |
| Capital Gains chargeable to Tax for the Assessment Year 2007-08
|
Nil |
| *As X has invested more than Rs 4,08,346 in purchase of a
house in Delhi within two years from the transfer of house in
Agra, entire amount of Capital Gains will be exempt. |
|
| Capital gains in transaction (2) |
Rs |
| Sale proceeds |
16,90,000 |
| Less: Cost of acquisition [Rs 12,70,000 being the actual cost
minus Rs 4,08,346, being the exemption granted under Section
54 in transaction (I) as the new house in Delhi is sold within
three years from the date of purchase]. |
8,61,654 |
| Short-term Capital Gains |
8,28,346 |
*Exemption under Section 54 cannot be availed because
the new house property is sold within 3 years. |
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