Capital gains on transfer of long term capital assests

snpathak (Querist) 24 March 2013 This query is : Resolved
A partnership firm sold its commercial property during A.Y 2011-2012 Which was acquired by the firm in A.Y.2006-2007.The detais are as under:----
sale consideration----13500000/=
cost of acquisition---6200000/=
firm not interested to invest sale consideration u/s 54E OFthe I.T.ACT1961.
How it can save maximum capital gain tax.

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Adv k . mahesh (Expert) 25 March 2013
The Income Tax Act exempts the capital gains from the sale of a commercial/ house if the taxpayer invests the gains in a residential property within two years from the date of sale or constructs another house within three years from the date of sale.
sale = 2011-2012
new residential property before 2014
construct a house within 2015

This means, you cannot invest in a commercial property or land to save tax - you have to necessarily buy residential property only. If the property is under construction, the two-year period is further enhanced to three years. However, you should not own more than one house, besides the house you are investing in.

Now, if a property has not been identified and purchased before the return has been filed or before the due date for filing the tax return, whichever comes earlier, the money has to be deposited in a special account known as the Capital Gain Account Scheme (CGAS). Doing this conveys to the authorities that you intend to buy a property to save the capital gains tax. Any withdrawal from CGAS should only be for payments to be made in relation to the purchase of the new property .

There are two types of accounts in the CGAS provision. The first account is like a savings deposit account . Withdrawals may be made from the account from time to time subject to other conditions of the scheme. This account is suitable for people who are planning to construct a house over a period of time. The amount withdrawn should be used for the purpose of purchase or construction of a house. It should be used for the purpose within 60 days of the withdrawal. Any unused amount should be deposited back in the same account.

and for this a chartered accountant will guide your the prevailing tax benefits and he will give appropriate guidance.

Sankaranarayanan (Expert) 29 March 2013
opt answer given by mr mahesh .As a partnership firm sure the firm auditor will help the deposit part and minimize the tax liabilities