regarding case law
Ritesh t a
(Querist) 02 May 2009
This query is : Resolved
sir,can u cite me any case law regarding section 54 & 54B of income tax in the state of j&k.
Kamal sodhi
(Expert) 20 May 2009
Section 54B
CAPITAL GAIN ON TRANSFER OF LAND USED FOR AGRICULTURAL PURPOSES NOT TO BE CHARGED IN CERTAIN CASES.
(1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his for agricultural purposes hereinafter referred to as the original asset, and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, - (i) If the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or
(ii) If the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced by the amount of the capital gain.
(2) The amount of the capital gain which is not utilised by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139 in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme 794 which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :
Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then, - (i) The amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and
(ii) The assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.
CASE: Under Section 54 of the Income Tax Act, 1961 any capital gain arising from the transfer of a residential house property which is a long term asset, is exempt from tax, provided that the assessee has purchased within a period of one year before the transfer (or within two years of the transfer) or has constructed a residential house property within a period of three years after the date of transfer.
Net Annual Value (Rs.2,50,000/- less Rs.15000/-) Rs.23,5000/-
.Less – Deductions
Repair (1/4 of 235000) = Rs.58750/-Interest
on loan = Rs.20000/- Rs.78750/-
Income from house Rs.156250/-
In case the entire amount of sales proceedings is not utilised in financing a house than only the proportionate amount so utilised would be available for deduction. Thus remaining long term capital gain would either be subject to tax @ 20% or deduction under section 54EC may be claimed by investing the balance of capita
