|
Mr X sells non-listed shares
in a private sector company on July 10, 2006 for Rs 8,05,000 (cost
of acquisition on June 15, 1984: Rs 60,000 expenses on sale: Rs
5,000). On July 10, 2006, he owns one residential house property.
To get the benefit of exemption u/s 54F, X deposit on July 30, 2007
Rs 6,00,000 in Capital Gains deposit accounts scheme. By withdrawing
from the deposit account he purchases a residential house property
at Delhi on July 6, 2008 for Rs 4,80,000. Ascertain |
|
Home
finance |
a. the amount of Capital Gain chargeable
to Tax for the Assessment Year 2007-08;
b. tax treatment of the unutilised amount;
c. when can he withdraw the unutilised amount; and
d. what X has to do to ensure that exemption
under Section 54F is never taken back.
| Computation of Tax |
| Assessment Year 2006-07 |
Rs |
| Sale consideration |
8,05,000 |
| Less: |
|
| Expenses |
5,000 |
| Indexed cost of acquisition
[Rs 60,000 X 519÷125] |
2,49,120 |
| Balance |
5,50,880 |
| Less: |
|
Exemption under Section 54F [Rs 6,00,000 being
the amount deposited in Deposit Account/Rs 8,00,000 being
net sale consideration X Rs 5,50,880 being the amount of Capital
Gain] |
4,13,160 |
| Long-term Capital Gain |
1,37,720 |
| |
|
| Notes |
|
| 1. In this case, X has not fully utilised the deposit account
for acquiring a residential house property. Out of Rs 6,00,000
deposited for acquiring the house, it is utilised to the extent
of Rs 4,80,000, Tax treatment of Rs 1,20,000 being the unutilised
amount, will be as follows: |
|
| |
Rs |
| Unutilised amount (a) |
1,20,000 |
| Net sale consideration (b) |
8,00,000 |
| Original Capital Gain (c) |
5,50,880 |
| Notional long-term Capital Gain [i.e., (a)/(b) X (c)] |
82,632 |
| Effective exemption under Section 54F [i.e. Rs 4,13,160 -
Rs 82,632] |
3,30,528 |
1. Rs 82,632 will be chargeable to tax as long-term Capital
Gain after the expiry of 3 years from date of transfer of shares
(i.e. July 9, 2009). Consequently it will be taxable for the Assessment
Year 20010-11.
2. The unutilised amount of Rs 1,20,000 can be withdrawn by X at
any time after July 9, 2009.
3. If X sells the new house at Delhi before July 6, 2011, then Rs
3,30,528 (exemption under Section 54F)
will be taken as long term Capital Gains of the year in which the
house is sold.
4. If X purchases any other residential house before July 10, 2008
or constructs any other house (income of which is taxable under
Section 22) before July 10, 2009, then Rs 3,30,528 (exemption under
Section 54F) will be deemed as long termed Capital Gain of the year
in which another house is purchased or constructed. |
