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Question ID : 32768

LTCG - Non utilisation of deposit under CG Scheme

Dear Friends, An assessee while filing return of income for the AY 2013-14 had admitted LTCG by invoking indexed cost and arrived at liability under LTCG. U/s 54F of the IT Act, since the assessee had proposed to acquire or construct a residential house, invested the LTCG under Capital Gain Account Scheme. He did not utilize the amount to avail the exemption U/s 54 F of the IT Act and offered LTCG to tax for the AY 2016-17. While admitting the LTCG he had worked out liability by adopting indexed cost relevant for AY 2016-17 and paid taxes thereon. The AO, during the course of assessment, has pointed out that the amount invested under CG Scheme has to be offered for tax instead of applying fresh index cost and arrive at the LTCG. Please clarify whether the AO is correct in rejecting the claim of the assessee by assessing the amount invested under Capital Gain Account Scheme

Posted by RAMAN on Aug 10, 2018

Filed Under Capital Gains

Answer ID : 71915

AO is correct,, further indexation will not be available as if it were allowed than it is a chance to get extended cost of indexation. which is not the objective of the tax...hence no further indexation is allowed...

Posted by anuj agarwal on Aug 14, 2018