Shashi (Learner) 09 August 2013

Capital gain on commercial office sale

Dear Experts,

I have a commercial office space, which i got as a result of a development agreement with a builder in my plot more than three years ago. The builder is finishing the building and the handover is not yet done. I also own a house that I live in currently.

Now I want to sell the commercial property which in my calculation attracts 1 crore of longterm capital gains (indexation taken into consideration).

What are my options to avoid paying the capital gains by reinvesting them in bonds and another properties? For example can I invest 50 lacs in bonds and remaining 50 lakhs in a proeprty. Or 1 crore should be invested ina property, and if yes what kind of property...can i invest in commercial property again? Please tell me the possible scenarios of avoiding the capital gain tax, as I am not able to get proper advice from anybody.

Thanks

Shashi

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4 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 ) 11 August 2013

As you are selling a commercial property, income tax can be saved under section 54F and 54EC.

Under 54F, you will have to invest in a residential property. Under 54EC, you will have to invest into capital gains bonds.

If you buy commercial land/property, no income tax exemption will be available and you will have to pay income tax on long term capital gains.

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s.k.sharma Advocate (Proprietor) 12 August 2013

under central sales tax assessment proceedings , there are too many requirements as per you sale, purchase and transtions, so far your quiery is concerned it is clear cut answer it that you have to submit c/f/e1/h forms if any ..............(being you have already made sales on account of concessional rate of tax) if not then there is need of sale summary to compile you Returns as you have already submitted before the department, secondly if you have already made sales out of india durring the assessment year then you should statisfy the assessing authority by filing bill of lading,proof of payment recieved in dollers , custom authorites clearance of the goods etc on other you should statisfy to the assessing authority by filing your audited balance sheet if any and trading account and also to show the sale and purchase of capital goods, GR for proof of out side state sales, and in state of delhi you should file DVat 30/31 , 2a and 2b sales summary and you will get your assessment done

s.k.sharma advocate mno 9891297097

306, aggarwal tower cu block pitampura delhi

Shashi (Learner) 12 August 2013

Thank you Ramachary garu for your answer. Is it true that I can invest that LTCG amount in a house, if I already own one house...?

Vallabh Parmar (Advocate) 26 August 2013

Yes a person can have maximum two residential houses so as to claim exemption us 54F .. Since you are having already one residential house still you can invest net sale proceeds of commercial units in new new residential house and you will get exemption benefit us 54F of I T Act 1961. please not that you have to retain new asset for minimum 3 years or else it will be taxed in the year of sale [if sold within 3 years ] as long term capital gain

Thanks