Capital Gain

Residential property and Tax on capital gain

Income Tax - When investors make profits on sale of assets like land, shares and mutual fund units, it is termed as capital gains. The investor has to pay tax on the resulting gains that is commonly referred to as capital gains tax. The amount of money outflow from your pocket depends on how long you held the property. If a residential property is hel...

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Taxation of Capital Gains on Sale of Equity Shares- FAQs

Income Tax - Taxation of Capital Gains on Sale of Equity Shares [SECTION 112A] TAX ON LONG TERM CAPITAL GAINS ON CERTAIN ASSETS  Q.1 What type of assets are covered? Ans:  an equity share in a company or a unit of an equity oriented fund or Q.2 What is the rate of tax under this section? Ans: A […]...

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Taxation of shares & other securities under Income Tax Act, 1961

Income Tax - Taxing the Profit from shares are always debateable issue, however CBDT issue circular No. 06/2016 dated 29/02/2016 wherein it provides option to taxpayer that to tax profit as Business Income or Capital Gain. This circular applicable for profit from listed shares only and option once exercised assesse will not allow to change his/her sta...

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Capital Gain on Land, Building or Both

Income Tax - CAPITAL GAIN (LAND & BUILDING) Capital Assets [Section 2(14)] (a) Property of any kind held by assesse, whether or not connected with business or profession. (b) Any securities held by Foreign Institutional Investor (FII) which has invested in such securities as per SEBI regulations but does not include: 1. Any stock-in-trade [other t...

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Long-term capital gains tax exemption on Investment U/s. 54EC

Income Tax - Section 54EC of the Income Tax Act, 1961 provides exemption from long-term capital gains tax provided an assessee invests within six months after the sale of his property in long-term specified assets. The Finance Act 2007 limited such exemption to Rs 50 lakh in any financial year. Some overzealous tax assessing officers seem to interpret...

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4 Major Tax Exemptions to Startups

Income Tax - 4 Major Tax Exemptions to Startups includes Income Tax Exemption on profits under Section 80-IAC of Income Tax (IT) Act, Tax Exemption on Investments above Fair Market Value, Introduction of Section 54EE in the Income Tax Act, 1961 and Amendment in Section 54GB of the Income-tax Act....

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Draft Notification on Tax on Long Term Capital Gain on Shares

Income Tax - Finance Act, 2018 has withdrawn the exemption under clause (38) of section 10 of the Income-tax Act, 1961 (the Act) and has introduced a new section 112A in the Act, to provide that long term capital gains arising from transfer of a long-term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit o...

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Amend Sec. 47(viab) related to indirect transfer of capital asset situated in India

Income Tax - The Finance Act, 2015 has amended provisions dealing with indirect transfer of capital asset situated in India. The amendment provides clarity on certain contentious aspects with regards to taxation of income arising or accruing from such indirect transfers....

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Draft rules on valuation of ‘unquoted shares’ for Sec. 56(2)(x)/50CA

Income Tax - CBDT has released the draft rules prescribing ‘unquoted shares’ valuation for purposes of Sec. 56(2)(x)/50CA (an important development impacting corporate restructuring) inviting comments from public....

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India and Singapore Sign a Third Protocol for Amending DTAA

Income Tax - Third Protocol amends DTAA with effect from 1st April, 2017 to provide for source based taxation of capital gains arising on transfer of shares in a company....

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Income From Land Sale by Assessee Engaged in Property Development Taxable as Business Income

Ashok Kumar Chouta Vs DCIT (ITATBangalore) - The issue under consideration is whether land sold by assessee engaged in property development taxable as capital gains or business income?...

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Sale of Agricultural Land after Conversion is Taxable as Capital Gain

Ramesh Raj Bohra Vs DCIT (ITAT Jodhpur) - The issue under consideration is whether sale of agricultural land after conversion taxing under capital gain or under business income? ITAT direct the A.O. to treat the property on sale of land as capital gains and given the benefit of exemption claimed by the assessee U/s 54F of the Act....

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Assessee holding General Power of Attorney with respect of Land Sold Not Liable for Capital Gains

ITO Vs Sejal Gopalbhai Shah (ITAT Ahmedabad) - ITO Vs Sejal Gopalbhai Shah (ITAT Ahmedabad) The issue under consideration is whether capital gain will be taxed in the hands of general power of attorney holder with respect to land sold? ITAT states that, the assessee was just general Power of Attorney holder with respect to the lands in dispute. ...

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Income from Sale of Land which was held as Investment is Capital Gain

CIT Vs Kishan House Builders Association (Karnataka High Court) - CIT Vs Kishan House Builders Association (Karnataka High Court) The issue under consideration is whether the sale of land which is held as investment is considered as capital gains or business income? High Court states that, from perusal of the entries it is evident that the assessee has not conduct...

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AO cannot ignore provisions of section 55(2)(b) in computation of indexed cost

Devendra Kumar Shroff Vs ITO (ITAT Kolkata) - Computation of indexed cost of acquisition by the AO, taking the cost of acquisition at the cost price of 15.04.1976 without considering the provisions of section 55(2) clause (b) and taking the base cost inflation index at 406 is bad in law and we direct that Rs. 8,30,000/- must be taken as the cos...

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No requirement of scrip wise reporting for listed shares in ITR

Release ID: 1659412 - (26/09/2020) - There was a report in certain section of media that stock traders/day traders are required to furnish scrip wise details in the return of income for AY 2020-21. The gain from share trading in case of stock traders or day traders is generally categorised as short-term capital gains or business income...

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Cost Inflation Index for Financial Year 2020-21- CBDT Notifies

Notification No. 32/2020-Income Tax [S.O. 1879(E)] - (12/06/2020) - CBDT notifies Income Tax Cost Inflation Index for Financial Year 2020-21 or Assessment Year 2021-22 vide  Notification No. 32/2020-Income Tax dated 12th June 2020 at 301. Cost Inflation Index helps taxpayer calculation his Long Term Capital Gain on sale of Long Term Capital Assets. Also Read-Cost I...

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Draft notification for determination of FMV of inventory converted in Capital Assets

Clause (via) in section 28 is inserted by Finance Act, 2018, w.e.f. Financial year 2018-19 and it provides taxation of Inventory in the year in which it is converted in capital Assets. CBDT issued Draft of notification to be issued for amending Income-tax Rules, 1962 for prescribing the manner of d...

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24 FAQs on Taxation of Long Term Capital Gain on Shares

F.No. 370149/20/2018-TPL - (04/02/2018) - Since the introduction of the Finance Bill, 2018 on 1st February, 2018, several queries have been raised in different fora on various issues relating to the proposed new tax regime for taxation of long-term capital gains. The responses to these queries are provided below....

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TDS on interest under Capital Gains Accounts Scheme of deceased depositor

Notification No. 08/2017- Income Tax - (13/09/2017) - It has been brought to the notice of CBDT that in cases of deceased depositor who has made deposits under the Capital Gains Accounts Scheme, 1988; the banks are deducting TDS on the interest earned on such deposits in the hand of the deceased depositor and issuing TDS certificates in the name of th...

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Recent Posts in "Capital Gain"

Residential property and Tax on capital gain

When investors make profits on sale of assets like land, shares and mutual fund units, it is termed as capital gains. The investor has to pay tax on the resulting gains that is commonly referred to as capital gains tax. The amount of money outflow from your pocket depends on how long you held the property. If a residential property is hel...

Read More
Posted Under: Income Tax |

Income From Land Sale by Assessee Engaged in Property Development Taxable as Business Income

Ashok Kumar Chouta Vs DCIT (ITATBangalore)

The issue under consideration is whether land sold by assessee engaged in property development taxable as capital gains or business income?...

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Sale of Agricultural Land after Conversion is Taxable as Capital Gain

Ramesh Raj Bohra Vs DCIT (ITAT Jodhpur)

The issue under consideration is whether sale of agricultural land after conversion taxing under capital gain or under business income? ITAT direct the A.O. to treat the property on sale of land as capital gains and given the benefit of exemption claimed by the assessee U/s 54F of the Act....

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Assessee holding General Power of Attorney with respect of Land Sold Not Liable for Capital Gains

ITO Vs Sejal Gopalbhai Shah (ITAT Ahmedabad)

ITO Vs Sejal Gopalbhai Shah (ITAT Ahmedabad) The issue under consideration is whether capital gain will be taxed in the hands of general power of attorney holder with respect to land sold? ITAT states that, the assessee was just general Power of Attorney holder with respect to the lands in dispute. This fact has not […]...

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Income from Sale of Land which was held as Investment is Capital Gain

CIT Vs Kishan House Builders Association (Karnataka High Court)

CIT Vs Kishan House Builders Association (Karnataka High Court) The issue under consideration is whether the sale of land which is held as investment is considered as capital gains or business income? High Court states that, from perusal of the entries it is evident that the assessee has not conducted any other activity other than [&helli...

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AO cannot ignore provisions of section 55(2)(b) in computation of indexed cost

Devendra Kumar Shroff Vs ITO (ITAT Kolkata)

Computation of indexed cost of acquisition by the AO, taking the cost of acquisition at the cost price of 15.04.1976 without considering the provisions of section 55(2) clause (b) and taking the base cost inflation index at 406 is bad in law and we direct that Rs. 8,30,000/- must be taken as the cost of acquisition instead of Rs.1,122/-.....

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Taxation of Capital Gains on Sale of Equity Shares- FAQs

Taxation of Capital Gains on Sale of Equity Shares [SECTION 112A] TAX ON LONG TERM CAPITAL GAINS ON CERTAIN ASSETS  Q.1 What type of assets are covered? Ans:  an equity share in a company or a unit of an equity oriented fund or Q.2 What is the rate of tax under this section? Ans: A […]...

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Posted Under: Income Tax |

No transfer in absence of performance of obligations by Assessee- sale of development rights under JV

ITO Vs Newtech (India) Developers (ITAT Mumbai)

ITO Vs Newtech (India) Developers (ITAT Mumbai) What was to be received by the assessee was from a joint venture, in which assessee itself was a participant, but, under the said arrangement, it was to be entirely funded by Shivalik Ventures Pvt Ltd. The essence of the arrangement was the performance of obligations by the […]...

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Assessee to Offer Business Income in Year in which Stock-in-Trade was Sold

DCIT Vs Clean City Estates Pvt. Ltd. (ITAT Hyderabad)

The issue under consideration is whether in case of real estate, tax liability will be arise when land was sold or when same was contributed for development under JDA?...

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Income from Sale of Land held as Stock for 13 years is Business Income

Kohli Estates Pvt. Ltd. Vs ITO (ITAT Delhi)

The issue under consideration is whether the CIT(A) is correct in confirming an addition of by treating sale of land as business income against the appellant's claim as "Long Term Capital Gain"?...

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Taxation of shares & other securities under Income Tax Act, 1961

Taxing the Profit from shares are always debateable issue, however CBDT issue circular No. 06/2016 dated 29/02/2016 wherein it provides option to taxpayer that to tax profit as Business Income or Capital Gain. This circular applicable for profit from listed shares only and option once exercised assesse will not allow to change his/her sta...

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Posted Under: Income Tax | ,

Capital Gain on Land, Building or Both

CAPITAL GAIN (LAND & BUILDING) Capital Assets [Section 2(14)] (a) Property of any kind held by assesse, whether or not connected with business or profession. (b) Any securities held by Foreign Institutional Investor (FII) which has invested in such securities as per SEBI regulations but does not include: 1. Any stock-in-trade [other t...

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Posted Under: Income Tax |

Long-term capital gains tax exemption on Investment U/s. 54EC

Section 54EC of the Income Tax Act, 1961 provides exemption from long-term capital gains tax provided an assessee invests within six months after the sale of his property in long-term specified assets. The Finance Act 2007 limited such exemption to Rs 50 lakh in any financial year. Some overzealous tax assessing officers seem to interpret...

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Posted Under: Income Tax |

Section 50C not applicable to leasehold rights

Noida Cyber Park Pvt. Ltd. Vs ITO (ITAT Delhi)

Noida Cyber Park Pvt. Ltd. Vs ITO (ITAT Delhi) Section 50C(1) of the Act, in so far as it is relevant for our purpose, prescribes that where the sale consideration received or accruing as a result of the transfer by an assessee of a capital asset, being ‘land or building or both‘, is less than […]...

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Transfer of Land as Capital Contribution & Stamp Duty issues thereon

There are following two issues arise when a partner transfers a land as a capital contribution to the partnership firm Question 1. Whether transfer of Land from Partners to Partnership firm will amount to ‘Transfer’ for the purpose of capital gain and if it is a transfer then what will be the full value of […]...

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Posted Under: Income Tax |

Capital gains under Income Tax Act 1961

Any Income derived from a Capital asset movable or immovable is taxable under the head Capital Gains under Income Tax Act 1961. The Capital Gains have been divided in two parts under Income Tax Act 1961. One is short term capital gain and other is long term capital gain....

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Transactions not Considered as Transfer under Income Tax Act,1961

Dear Friends , as we are aware that any profits arising from transfer of a Capital Assets effected in the previous year, shall be chargeable to income tax under the head ‘Capital Gain,’ and shall be deemed to be the income of the previous year in which the transfer took place unless such capital gain […]...

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Posted Under: Income Tax |

Compensation for Relinquishment of Right to Sue for Breach of Contract is non taxable Capital Receipt

Popular Estate Management Ltd. Vs. DCIT (ITAT Ahmedabad)

The issue under consideration is whether the CIT(A) is correct in confirming the addition while treating the compensation received for relinquishment of right to sue as taxable business income & accordingly considered it as revenue receipt as against the capital receipt?...

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Section 54 deduction allowed on Advance paid for Purchase of Property Prior to Sale of Old Capital Asset

Moturi Lakshmi Vs. ITO (Madras High Court)

The issue under consideration is whether the advance to the seller of flat prior to the date of sale of old capital asset will be eligible for claiming deduction u/s 54 under capital gains?...

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Investment on Renovation of New Residential House Eligible for section 54F Exemption

Juveria Begum Vs ITO (ITAT Hyderabad)

The issue under consideration is whether the investment made on renovation of new residential house is eligible for exemption u/s 54F?...

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No requirement of scrip wise reporting for listed shares in ITR

Release ID: 1659412 (26/09/2020)

There was a report in certain section of media that stock traders/day traders are required to furnish scrip wise details in the return of income for AY 2020-21. The gain from share trading in case of stock traders or day traders is generally categorised as short-term capital gains or business income....

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Development Agreement – Income Tax on Land Owner

Computation of income tax liability in the hands of the land owners upon execution of a development agreement has been a matter of litigation for ages. The injustice is caused to the land owners due to capital gain tax liability arising on the date of execution of the DA and handing over possession of the land to the Developer....

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Posted Under: Income Tax |

Capital Gain on Conversion of Capital Asset into Stock in Trade

Section 45(2) of Income Tax Act deals with the cases where a capital asset is converted into stock in trade. Whenever a capital asset is converted into stock in trade by an assessee it is deemed as transfer of capital asset and attracts capital gain provisions, in spite of the fact that the ownership of such capital asset doesn’t change...

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Deeming Fiction of Sec 50C can’t be brought into Section 54/54F Exemption

Dhanveer Singh Gambhir Vs ITO (ITAT Indore)

The issue under consideration is whether the Section 50C need to be complied at the time of computation of exemption u/s 54 or 54F? ...

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Capital Gain payable on Transfer of Property to Builder through Sale Agreement alongwith POA

Shri. Tirumalasetti Srinivasa Rao Vs. DCIT (ITAT Visakhapatnam)

Once the assessee had entered into agreement of sale coupled with power of attorney and handed over the possession of the property to the vendee, the transfer is complete as provided u/s 47 of the Act....

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Section 54F Exemption on Investment in House Property in USA Prior to 01.04.2015 allowable

CIT Vs. Vinay Mishra (Karnataka High Court)

The issue under consideration is whether the assessee is entitled to claim exemption u/s 54F of the Income Tax Act in respect of investment made in the house property in USA? ...

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Indexed cost of acquisition can be reduced to compute book profits U/s. 115JB

Best Trading and Agencies Ltd. Vs. DCIT (Karnataka High Court)

The issue under consideration is whether the indexed cost of acquisition can be reduced for the purpose of computing book profits under Section 115JB of the Act?...

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Purchased 4 Adjacent Residential Flats- Can Claim Exemption U/S 54F?

Mrs. Kamal Murlidhar Mokashi Vs. ITO (ITAT Pune)

Mrs. Kamal Murlidhar Mokashi Vs. ITO (ITAT Pune) Capital Gain-Purchased 4 Adjacent Residential Flats- Can Claim Exemption U/S 54F (With Provisions of Section 54F) In this article I will discuss some clarification (with the judgment of a recent case law) regarding the provisions of Section 54F i.e. Exemption from Capital Gain on purchase o...

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Posted Under: Income Tax |

Section 54/54F- Purchase of under construction flat from builder- Purchase or Construction?

PCIT Vs Akshay Sobti (Delhi High Court)

The issue under consideration is whether agreement for construction of house interpreted as agreement for purchase for availing benefits of deduction u/s 54F if construction completed within three years?...

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Surplus consideration received on ‘Surrender of Booking Rights’ tantamount to ‘Capital Gains’

Mukesh Sohanraj Vardhan Vs. ITO (Mumbai ITAT)

Mukesh Sohanraj Vardhan Vs. ITO (Mumbai ITAT) The ITAT Mumbai has put to rest an important controversy in the case of Mukesh Sohanraj Vardhan vs Income Tax Officer Mumbai decided on 28 August 2020 by holding that the extra consideration received on cancellation of Booking of Flats constitutes a ‘Capital Receipt’ and cannot be taxed a...

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No Capital Gain arises if Permissive Possession Not handed Over to Builder during Concerned Year in case of JDA

A. R. Prasad Vs ITO (ITAT Bangalore)

The issue under consideration is whether the capital gain will be chargeable in case of JDA even if Permissive possession was not handed over to builder during the concerned year?...

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Date of Award is Date of Accrual of Gains under Section 45 in case of Compulsory Acquisition

Raj Pal Singh Vs CIT (Supreme Court of India)

The issue under consideration is whether the High Court was right in taking the date of award as the date of accrual of capital gains for the purpose of Section 45 of the Act of 1961?...

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Deduction u/s 54F Allowed Even if Construction of New House Commenced Prior to Transfer of Asset

Natta Suryarao Vs ITO (ITAT Visakhapatnam)

The issue under consideration is whether the assessee would be entitled for deduction u/s 54F if construction of house is commenced prior to the transfer of the asset?...

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Taxation of gold and gold products

Profit on sale of your gold is taxable as Capital Gains unless you are a dealer in gold and jewellery in which case it becomes taxable as Business Income...

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Posted Under: Income Tax |

Income Tax on sale of property

Govt. has imposed many restrictions on sale of property and has also allowed deductions and exemptions that can be claimed when someone sells his property. Some of the Considerations to be kept in mind while selling property are explained in this article....

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Posted Under: Income Tax |

Taxability on Sale of Agriculture Land under Income Tax Law

Any gain or loss arising from transfer of Capital Asset shall be considered as a Capital Gain or Loss as the case may be. Section 45(1) of the Income Tax, 1961, is charging section and provides that- ‘Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, […]...

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Posted Under: Income Tax |

Section 54F exemption allowable before Intra Head Adjustment of Losses

Shri Naresh Jain Vs ACIT (ITAT Jaipur)

whether it is lawful to first compute capital gain after doing intra head adjustments and whether the deductions u/s 54F should be allowed from the net income computed after intra head adjustments?...

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Section 54F exemption on gain from House Constructed on own land

Rajesh Kumar Adukia Vs DCIT (ITAT Ranchi)

Whether A.O. is right in dismissing the claim of the assessee u/s. 54F of the Act on the ground that residential flat was not constructed after the date of transfer and they were constructed alongwith saleable flats?...

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Capital Gain u/s 50B applicable on sale of undertaking which covers Depreciable Assets forming part of Industrial Undertaking

DCIT Vs Accelerated Freeze Drying Co. Ltd. (ITAT Cochin)

whether sale of industrial unit as a whole as a continuing business with land, building, plant, machinery and all equipment as a going business with assets and liabilities taxable under section 50B as slump sale or not?...

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Capital gain on sale of shares- Taxation

Capital gains in case of transfer of shares ♦ If any capital asset has been transferred like land, building, gold etc. profit shall be called capital gains and if the asset has been transferred within a period of three years, capital gains shall be short term and shall be taxable at the normal rate and […]...

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Posted Under: Income Tax |

Section 54F exemption cannot be denied for Home Loan default

Goulikar Jawaharlal Vs ITO (ITAT Hyderabad)

The issue under consideration is whether the default in home loan by the owner of the property can be the reason to disallow the capital gain deduction u/s 54F of the Income Tax Act, 1961?...

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Section 54 benefit cannot be denied for Procedural Non-Compliance

ITO Vs Smt. Rekha Shetty (ITAT Chennai)

The issue under consideration is whether the benefit of section 54 of the Income Tax Act, being a beneficial provision, can be denied to the assessee due to non-compliance of procedural requirements?...

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Receipt on Surrender of Tenancy/Sub-tenancy Rights Not Taxable as Capital Gains

Yogini Mohit Sahita Vs ITO (ITAT Mumbai)

Yogini Mohit Sahita Vs ITO (ITAT Mumbai) The issue under consideration is whether amount received on surrender of such tenancy/sub-tenancy rights would be taxable as capital gains? In the instant case, Smt. Saraswati Vithaldas Sahita occupied the said flat at 2nd floor of the building known as Gangasagar on license basis. This is crystal ...

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Taxation Must-Knows If Selling House

Buying a house is a dream for each one of us. There are various tax incentives offered by government towards stimulating individuals to buy house property under ‘Housing for All’ Mission. However it is of vital importance to keep an eye on calendar to time it well when we want to sell house property since […]...

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Posted Under: Income Tax |

Major Change in Schedule CG (Capital Gain) for returns of AY 2020-2021

Major Change in Schedule CG (Capital Gain) for returns of Assessment Year (AY) 2020-2021 Long term Capital Gain on Listed Securities on which STT has been paid was exempt under section 10 (38) of Income Tax Act (Up to Assessment Year 2018-2019) W.E.F. Assessment Year 2019-2020, Long term Capital Gain on Listed Securities on which [&hellip...

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Posted Under: Income Tax |

How to save Income tax on sale of residential property?

Many taxpayers are not aware the provision of the income tax act on how to save the tax on the sale of residential property.  They earn profits on the sale of residential property and pay the taxes. They can save the tax. I have brief the methods from which the taxpayers can save the tax. […]...

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Posted Under: Income Tax |

Capital Gains taxable in Year of Transfer of Possession of Land

DCIT Vs Shivaji Bhagwanrao Jadhav (ITAT Pune)

The issue under consideration is whether Capital Gain will be taxable in the year when consideration for sale of land received irrespective of the possession of the land?...

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Set off of long term capital loss against STCG on depreciable assets sale

The long term capital loss (LTCL) can be set off against the short term capital gain (STCG) arise on depreciable assets u/s 50 of income tax act, 1961 As per provisions of section 74(1)(b) loss related to a long term capital gain can be set off against the long term capital gain. Long Term Capital […]...

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Posted Under: Income Tax |

Taxability of Joint Development Agreement under Income Tax Act, 1961

Joint Development Arrangement (JDA) has always been an area of conflict between the assessee and the tax department. In real estate sector JDA i.e. Joint Development Agreement has emerged as most popular arrangement between land owner and developer. In this article I will explain taxability of JDA under Income tax law. Meaning of Joint De...

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Posted Under: Income Tax |

Section 54F deduction restricted to only one residential property

Late Susan Cherian Vs ITO (ITAT Bangalore)

The issue under consideration is whether the capital gain deduction benefit is restricted to only one residential property under section 54F of the Income Tax Act?...

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Tax on LTCG u/s 112A Vs Tax on LTCG Prior to Finance Act 2018

Taxation of Long Term Capital Gain (LTCG) under section 112A vis a vis Taxation of Long term Capital Gain Prior to Finance Act, 2018 We all saw an Havoc amongst taxpayers when Finance Act, 2018 was announced in the union budget speech specifically among those assessees whose major part of their total income consisted of […]...

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Posted Under: Income Tax |

Compensation paid to Earlier Buyer to Cancel Agreement is Deductible Expenses u/s 48 for Capital Gains

CIT Vs Shakuntala Kantilal (Bombay High Court)

The issue under consideration is Whether compensation paid to earlier buyer to cancel the agreement is deductible expenditure u/s 48 for calculation of Capital Gains?...

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Mere Expense on Electricity & Water bills won’t convert Status of Plot of Land into Residential Property

Shri Shailesh Kumar Chaturvedi Vs ITO (ITAT Jaipur)

The issue under consideration is whether the expense on electricity and water bill will convert the status of plot of land into residential property and accordingly assessee will be eligible for deduction u/s 54?...

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Unlisted shares sold before 11.07.2014 eligible for benefit of short holding period

Mrs. Neelu Analjit Singh Vs The Addl. Commissioner of Income tax (ITAT Delhi)

The issue under consideration is Unlisted shares sold after holding for 23 months considered as Long Term Capital Gains or Short Term Capital Gains?...

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Transfer of land held as stock on HUF partition not amounts to conversion into Capital Asset

CIT Vs C. Ramaiah Reddy (Karntaka High Court)

The issue under consideration is whether land held as stock, transferred upon HUF - partition, tantamount to conversion into capital asset for the purpose of imposing a capital gain tax?...

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FMV determination without giving opportunity of being heard to Assessee is Unjustified

Astik Mondal Vs ITO (ITAT Kolkata)

The issue under consideration is whether Fair Market Value of property determined without giving access to the DVO’s report to Assessee and without considering the Assessee’s objections is justified in law?...

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STT paid Long Term Capital Loss Can be Set Off against Non-STT paid Long Term Capital Gains

Rare Investments Vs CIT (ITAT Mumbai)

The issue under consideration is whether the long-term capital gain on sale of non-STT paid shares can be set off against long-term capital loss arising from STT paid shares? ...

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Section 54/54F exemption: ITAT directs AO to consider additional evidence

Hemalatha Mallapuram Vs ITO (ITAT Hyderabad)

The issue under consideration is whether the tribunal can give fresh opportunity to the assessee to submit evidence which assessee might not have been able to provide at the time of hearing?...

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Section 50C not applies if Market Value of Property reduced due to Defect in Property Title

Aruna Kommuri Vs ACIT (ITAT Hyderabad)

The issue under consideration is whether the provisions of section 50C of the Act can be applied in cases where the market value of the property is reduced due to the defect in the title of the property?...

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Law Vs Case Law> Role of A Professional (CA & Lawyer) (Part II)

This is a supplement to the earlier published Article under the above Title (‘the earlier Article’). Law Vs Case Law Role of A Professional (CA And Lawyer)- Part I 1.The idea of acquiring and holding a ‘Unit’ in a building, with ‘ownership’ rights, – notwithstanding its peculiar characteristics, as distinct from an indep...

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Posted Under: Income Tax |

Exemption from Capital Gains Tax arising on Sale of House property

The Income Tax Act grants total or partial exemption under Section 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54H. ♣ Capital Gains Arising from Transfer of Residential Property – Section 54 Section 54 provides exemption on capital gains arising from the transfer of a residential house, being building or lands appurtenant (belonging) there...

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Posted Under: Income Tax |

Sale of a capital asset converted into stock-in-trade: Tax-treatment

In business there are occasions when a capital asset is converted into stock-in-trade and stock-in-trade is converted into capital asset. There may also be occasions when an asset ceases to be a stock-in-trade. In this context, section 45(2) of the Income-Tax Act, 1961 (the Act) is relevant. For the sake of ready reference, section 45(2) ...

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Posted Under: Income Tax |

Law Vs Case Law Role of A Professional (CA And Lawyer)- Part I

By and large,  clients engage CAs  for professional assistance, from the initial stage of preparing and filing tax return,  then during the assessment proceedings, and, thereafter, up to the second appeal stage of ITAT for representation....

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Posted Under: Income Tax |

Income from sale of shares is Business income or Capital gains

This article is for better understanding of Treatment of Income from Sales of shares or other securities. Here I am explaining about the possibilities one can treat the income from sale of shares and what are the benefits of it. The article also comprises the corresponding guidelines from CBDT which are self explanatory and fiercest....

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Posted Under: Income Tax |

No Section 54B exemption if new land not purchased within a period of 3 years

Bhagwan Keshu Sakhare Vs ITO (ITAT Pune)

Bhagwan Keshu Sakhare Vs ITO (ITAT Pune) The issue under consideration is whether CIT is correct in denial of exemption u/s 54B of the Act? In the present case, the case of assessee is selected for limited scrutiny under CASS for the reason of “Deduction claimed under the head capital gains”. After claiming deduction for […]...

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No taxable gain on Land Purchased & Sold as Agricultural land

J.K. Bros Constrafin Ltd Vs ITO (ITAT Hyderabad)

The issue under consideration is whether the land purchased by the assessee as agricultural land & whether the income from such sale is business income or capital gains?...

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Taxability of Interest on Compensation or Enhanced Compensation

The statutory provisions for the income in the nature of ‘Interest received on compensation or on enhanced compensation’ were brought to Income Tax by the Finance Act’ 2009. When these provisions were introduced, the Memorandum explaining the provisions of the Finance Bill 2009 had this to say:...

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Posted Under: Income Tax |

LTCG on sale of land- No exemption on failure to establish that land is agricultural

Shri. Rajesh. Kumar Vs JCIT (ITAT Delhi)

Assessee has not furnished before AO all necessary evidence so as to establish that land in question was agricultural land only as per provisions of sec. 2(14)(iii)(b) of I.T. Act....

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Taxability – Compulsory Acquisition of Capital Asset

Compulsory acquisition is the power of government to acquireprivate rights in land without the willing consent of its owner or occupant in order to benefit society. Compensation against such acquisition is provided to the assessee by the government....

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No Capital Gain Tax if Consideration not Discharged by Purchaser

ACIT Vs Sh. Ijyaraj Singh (ITAT Jaipur)

whether the AO is correct in chargeing capital gain in the hands of assessee irrespective of the fact that the full consideration not received by the assessee?...

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Profits on sale of shares when taxable as capital gains & when as business income

After my article on tax implication of different treatments of profits on sale of shares, I have received unprecedented number of mails asking for clarification as to when it is to be treated as capital gains and when it can be treated as business income. So I decided to write an article on the subject proper as to when it can be treated ...

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No capital gain tax on land transfer to co-op society formed by flat purchasers

J. S. & M. F. Builders Vs A. K. Chauhan and others (Bombay High Court)

Whether the AO is correct in considering that the capital gain will arise in the year when the land is transferred to the co-operative society formed by the flat purchasers and not when flats are sold?...

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An Insight on Joint Development Agreements

CA Sudeep Chhallani Introduction Due to high-sky increase in land prices and avoiding outright purchase of land by making heavy investment today real estate developers often enter into the Joint Development Agreement (JDA) with the land owners wherein the real estate developers are entrusted with the task of developing land. Similarly the...

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Posted Under: Income Tax |

Capital Loss from Listed Shares and Equity Mutual Funds

In India, the income from long term capital gains on transfer of Shares and Mutual Funds on which security transaction tax (STT) has been paid, is exempt from levy of income tax under section 10(38) of the Income Tax Act, 1961 (‘the Act’). This is a well known exemption amongst the tax payers and investors in India. ...

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Taxability of Chaotic Interest Incomes from Acquisition of Land

The scope of this write up is an attempt to clarify chaos that is taxability of various incomes (specifically interest) from compulsory acquisition of land. Types of income which an asset under consideration can result are capital gain (if asset is a capital asset), interest on compensation or enhanced compensation....

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Posted Under: Income Tax |

Decoding ‘One House’, ‘One Unit’ Concept in Section 54F

Assesses wanting to claim exemption u/s 54F should ensure that there is unity of structure and they are indeed just independent units and not independent houses altogether that are located in different places....

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Year of taxability of unutilised portion of capital gains- Section 54/54F

Deepak Bhardwaj Vs ITO (ITAT Delhi)

Deepak Bhardwaj Vs ITO (ITAT Delhi) Only question that arises for our consideration is whether the unutilised portion of capital gains is liable for tax either in the year in which such long term capital gains arose or in the year in which the period of 3 years for such utilisation expires. Under identical facts […]...

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Slump Sale and Related Income Tax Provisions

In the process of integration of the Indian economy with the world economy, a number of companies are going for restructuring to gain benefits from large scale operations and focus upon its core competencies. In the restructuring exercise, certain companies sell off their unprofitable business activities and the business activity as a wh...

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Posted Under: Income Tax |

Section 50C of Income Tax Act, 1961- FAQs

Section 50C says that when an individual sells land or building or both at a consideration lower than the Stamp duty value adopted or assessable by authority, then the Stamp duty value adopted or assessable by authority of property would be deemed to be the sales consideration for computation of Capital Gain under section 48 of Income Tax...

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Capital Gains & Interest on compensation received on Compulsory acquisition of urban agricultural land

Capital Gains & Interest on compensation received on Compulsory acquisition of urban agricultural land Section 10(37) inserted by the Finance Act, 2004, with effect from 01.04.2005 (from assessment year 2005-06). Under Section 10(37) of the Income Tax Act, Capital Gains on compensation received on compulsory acquisition of urban...

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Provisions of section 55 – ‘Stamp duty value’ X ‘cost of acquisition’ (Amendment – Rationalisation in Reverse Gear)

There is no correlation - real or virtual- between the 'stamp duty value' and 'cost of acquisition'; and, as such, the amendment as proposed is both in Form and Substance, wanting/ devoid of any merit!...

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Bad Debts Under The Head ‘Capital Gains’

Recently, an interesting question arose before the Delhi ITAT in the case of M/s. Anant Raj Limited v. DCIT1. Where the assessee has offered an income under the head capital gain in past years, can he change the head of income in subsequent years for the related transaction? The ITAT has held in affirmative stating […]...

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Know-how under development is self-generated asset & hence no Capital Gain Tax

Bharat Serums And Vaccines Ltd. Vs ACIT (ITAT Mumbai)

Whether the CIT(A) is correct in holding that consideration received on assignment of know-how is chargeable to tax as Capital Gains?...

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Cost Inflation Index | Meaning & Index from 1981-82 to 2020-21

Article discusses Meaning of Cost Inflation Index (CII) which is used for Computation of Long Term Capital Gain. Cost Inflation index are Notified by CBDT every year and till date CBDT has notified Cost Inflation Index for the Financial Year 1981-82 to Financial year 2020-21.  Cost Inflation index are used for computing indexed cost of [...

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Cost Inflation Index for Financial Year 2020-21- CBDT Notifies

Notification No. 32/2020-Income Tax [S.O. 1879(E)] (12/06/2020)

CBDT notifies Income Tax Cost Inflation Index for Financial Year 2020-21 or Assessment Year 2021-22 vide  Notification No. 32/2020-Income Tax dated 12th June 2020 at 301. Cost Inflation Index helps taxpayer calculation his Long Term Capital Gain on sale of Long Term Capital Assets. Also Read-Cost Inflation Index – Meaning & Index f...

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Assessee can claim Section 54F deduction during Section 147 Proceedings

Pyare Lal Saini Vs ITO (ITAT Jaipur)

Whether AO is correct in rejecting the claim of assessee regarding the deduction u/s 54F, which was made first time during Reassessment Proceedings?...

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Capital Gains of Cyprus Co not taxable in India as per DTAA prevailing at that time

DCIT Vs Narmil Infosolutions Pvt. Ltd. (ITAT Delhi)

The issue under consideration is whether the sale of shares by a Cyprus company to the assessee of an Indian company, who was holding a technology Park [immovable property] as only asset, is taxable in India in view of the Double Taxation Avoidance Agreement between India and Cyprus?...

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Date of possession as date of purchase of flat for Section 54F exemption allowed

Rajiv Madhok Vs ACIT (ITAT Delhi)

The contention of the assessee is that since final consideration was paid and the possession of flat was received within a period of one year prior to the date of transfer of capital asset, the same should be considered as the date of purchase. Whereas, the stand of Department is that the date of execution of agreement for purchase of fla...

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Exemption from Capital Gain Tax | Complete Guide

This article focuses on the exemptions available to an assessee from capital gain tax under Income Tax Act, 1961. Any profit or gain arising from Transfer of Capital Asset (long term or short term) shall be chargeable under the head capital gain in the year of transfer. However, there are some exemptions on such capital […]...

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Posted Under: Income Tax |

Section 55: AO cannot reject valuation report without proving lesser valuation

DCIT Vs Ajanta Tubes Ltd. (ITAT Delhi)

DCIT Vs Ajanta Tubes Ltd. (ITAT Delhi) The issue under consideration is whether the A.O. is correct in rejecting the valuation report obtained by the assessee? In the present case, assessee had sold its land and building. Assessee had taken the cost of acquisition for land as per valuation report as at 1-4-1981 as against […]...

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Indexation of Inherited Property

A big question arise in the mind of every professional that whether benefit of Indexation can be claimed on Inherited Property ; if yes then second half thought is whether it can be claimed from the year in which it is first held by the assessee or from the year in which it is occupied by the Previous Owner or predecessor. ...

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Concept and Tax effect of Switching in Mutual Funds

Article explains What is Switching, Benefits of Switching, Tax effect of Switching If the units are held as stock-in-trade and Tax effect of Switching  If the units are held as investments. Hi, almost all of us are aware of investing in Mutual Funds and their respective Tax effects. However, some areas still remain Grey for […]...

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Posted Under: Income Tax |

Analysis of Exemptions Under Capital Gains

Profit on transfer of a capital asset is chargeable under the head Capital Gains. Section 45 makes the gains arising out of the transfer of a capital asset chargeable to tax under the provisions of the Income Tax Act, 1961. However, the chargeability has been subjected to the provisions of sections 54, 54B, 54D, 54E, […]...

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Posted Under: Income Tax |

Consultation paper on proposed amendment to delisting regulations: Will it be a case of “many a slip between the cup and the lip”?

Traditionally, a listed company (Parent Co) wishing to integrate the operations of its listed subsidiary (Sub Co), usually contemplates a merger. However, there may be instances in which a merger is unfeasible for a plethora of reasons, viz.,industry-specific constraints (e.g. licences or contracts with specific restrictions on transfer),...

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Posted Under: Income Tax |

Capital Gain tax payable on sale consideration receipt despite Release Deed at a later date

Shri I. Seshagiri Rao Vs ITO (ITAT Hyderabad)

Shri I. Seshagiri Rao Vs ITO (ITAT Hyderabad) The issue under consideration is whether the capital gains will be applicable where assessee signed a release deed waiving all his rights, title and interests in the property? During the assessment, the A.O. found that the assessee had entered into a release deed and also a supplementary [&hel...

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Capital Gain Tax on Dissolution/Reconstitution of Partnership Firms in the Hands of Partners & Firms

Taxability in the event dissolution/reconstitution of Partnership Firms have always been point of contentions before various Judicial Forums and the provisions of Income Tax has been amended from time to time to address the ambiguity in taxing the same. Our article is limited to Taxation in following situations 1. Dissolution of Firms 2. ...

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Deeming section 50C cannot override section 45(3)

ACIT Vs Amartara Pvt. Ltd. (ITAT Mumbai)

The issue under consideration is whether A.O. is correct by adding long term capital gains by applying section 50C in case where land is transferred by the partner in his firm as capital contribution?...

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Capital Gain tax liable on property sold by bank to recover loan given to group concerns

T.S. Hajee Moosa & Co Vs. ACIT (ITAT Chennai)

The issue under consideration is whether Capital Gains will be applicable in case where Bank sold the property of group concern as it failed to repay the loan?...

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Income Tax on Short Term Capital Gain with examples

Gain arising on transfer of capital asset is charged to tax under the head Capital Gains. Income from capital gains is classified as Short Term Capital Gains and Long Term Capital Gains. In this part you can gain knowledge about the provisions relating to tax on Short Term Capital Gains....

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Posted Under: Income Tax |

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