Iimprovements to a house bought from capital gains account.
jagannathansinger
(Querist) 30 January 2015
This query is : Resolved
Sirs,
2013 August I sold a land property for Rs.90 lakhs which I bought in 1985 for Rs.5000.
Of the Rs.90 lakhs sale realization, the net realization was Rs.87,96,944.00 after deducting the following :
Cost of acquisition with indexation 47,326
Cost of improvement with indexation 65,730
Brokerage for selling the land property 90,000
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Total deduction claimed 2,03,056
Net realization on sale of land property. 87,96,944
I invested in Capital Gain Account before 31.7.2014 the entire amount of Rs.90,00,000/- with Canara Bank, T. Nagar, Chennai.
2014 August I bought a land with house including registration charges for Rs.87,50,000 which I paid out of my CG Account.
In addition, brokerage paid Rs.1,00,000/- to the real estate broker who facilitated the purchase out of my personal account as bank would not pay this from CG account.
Thus total investment was Rs.88,50,000.
The house that I bought required the following improvements to make it habitable (not additional structure, but only improvement to the existing building :
- providing steel protective grills to the doors, balcony, etc.,
- raise the height of the compound wall from 4ft to 5.50’ high.
- build a 2-foot wall to the open well and grill-cover it.
- give a complete painting/white washing, etc.
These cost me around Rs.2,50,000/- but the bank refuses to make payment from my CG Account as according to them improvement expenses cannot form part of the cost of the house purchased.
I was given to understand that cost of improvement/renovating the house is allowed under both Sec 54 and 54F. My bankers say these sections apply only for the construction of a new house and not for the house bought.
I solicit your valuable guidance in this matter so that I can again approach Canara Bank to release payment of the above improvement expenses from my CG Account.
Sincere thanks and regards,
Jagannathan Singer
T. Nagar, Chennai 600017
944 427 9876
ruco@vsnl.com
T. Kalaiselvan, Advocate
(Expert) 01 February 2015
Consult your auditor or a tax consultant who will be able to guide you properly in this respect or post your query in the CA club.
