Long term capital gain

C.J.Sriram (Querist) 25 March 2013 This query is : Resolved
Mr.X purchased a PLOT in May 1988 and sold the same in March 2011. He deposited the FULL Sale Proceeds received in March 2011 under the Capital Gain Scheme in a Nationalised Bank.

Query
1.Under which section the Exemption is to be claimed, being LTCapital asset, otherthen a residential house.
2.
Can he use it for Construction of a New residential house within 3 years.(before 31.3.2014)
3.
Whether his Status if a (a) Resident or (b) NRI would alter the situation.He is an Indian.
4. Can he file the Return before 31.3.2013 if he has not filed already.

Follow Query

Report Abuse

Shrichand Nahar (Expert) 26 March 2013
Mere deposit of amount in specified account may not provide any exemption from long term capital gains.

X appears to have already missed option of investing in Bonds U/s.54EC required to be done within 6 months from date of accrual of LTCG.

X also appears to have missed or would shortly be missing option of purchase of house property U/s.54F.

X may opt for construction of house property and claim exemption under section 54F.

M V Gupta (Expert) 26 March 2013
Mr. X's case is covered by the provisions of Section 54F of the IT Act. Under the provisions of the section exemption from the CG tax is available only if X had purchased a residential house in one year preceding the transfer of the LT asset, i.e., in his case if he had purchased the house during the period March, 2010 to February, 2011 or has purchased the house within two years of the sale of the plot in question. Both these options are not now available. Deposit of the sale consideration in the bank as stated is not eligible to claim exemption. The only option now available to him is to construct a house within 3 years of the transfer of the plot, which is due to expire by February, 2014. Hence he may start efforts to construct a house immediately.
In view of what is stated above the answers to ur questions are: 1. Sction 54F of IT Act. 2.Yes. 3. Yes.

C.J.Sriram (Querist) 26 March 2013
Thanks Mr.Shrichand Nahar and Mr.M.V.Gupta.

Could u pl enlighten if X can file returns before 31.3.2013 if he has not filed already for AY 2011-12 and state that he made the LTCG and has also deposited the CG to use for construction.

The deposit in the Capital Gain RIP/FD account is only to avail the exemption.Then how is it that the Deposit of the Sale Consideration in the Bank is not eligible for exemption.Could u Please clarify on this Sir.
This will be used for the Construction now.

M V Gupta (Expert) 27 March 2013
X should file return for 2011-12 immediately and pay penalty for delay. The bank deposit is not prescribed in Section 54F. I suggest u read the section urself to clear all ur doubts.