sood (Director) 18 July 2011
I had sold my house in May 2008 and purchased a plot in Nov 2008 availing exemption u/s Section 54 for Capital Gain on which a house was built and completed within the stipulated three year period. Now I have sold this house in July 2011 and the sale deed shall be executed in Nov 2011. On this sale there shall be a gain of 30 lacs. approximately. Will this be a short term or a long term capital gain.
A V Vishal (Advocate) 18 July 2011
If the specified assets are transferred within three years from the date of acquisition, the capital gain exempted earlier would be liable to tax in the year in which they are transferred. Hence you have to wait for a minimum of three years to complete to qualify for LTCG aor else the entire transaction will be taxed as stated above.
k.chandrasekharan (advocate) 19 July 2011
As far as the first capital gain arising out of sale in May 2008, LTCG benefit u/s 54 has become absolute since the stipulated condition of completion of a new residential house within three years of sale transaction. Care should be taken to mention all relevant dates including date of completion in the annexure to the tax return.
Regarding the second transaction, if the date of registration is over three years from the date of registration of the plot of land, stated to have been purchased in Nov.2008, then the capital gain arising would be treated as LTCG. Also, it shall be ensured that payment of full consideration for this sale is also effected after three years, to avoid contrary view by the Assessing Officer.
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