Question ID :
32772
Long term /Short term capital Gain
Mr. X purchased a House property in June 1990 and Gifted to Mr. Y (his real brother) in June 2018 Now in Aug,2018 he sold that Property and invested the entire capital gain in new property . whether the Capital Gain will be considered as Long term capital gain in hands of Y and is he would be entitle to exemption u/s. 54
Posted by
SANDEEP KAPOOR
on
Aug 17, 2018
Filed Under
DIRECT TAXES
Yes Capital gain is Long term capital gain.
Ant gift received from relative is not taxable as Mr.Y is a relative to Mr.X.
Indexation benefit is applicable and cost is considered as cost to the Previous owner or Fair Value as on 01.04.2000 which ever high is applicable.
Exemption u/s 54 is available.
Posted by
B Manohar Reddy on
Aug 17, 2018
Answer ID :
71923
1
Posted by
PARIKH ASHISH NARENDRAKUMAR on
Aug 18, 2018
Answer ID :
71925
Dear Mr.Sandeep,
As per explanation 1(b) to section 2(42A) of Income Tax Act, 1961 capital asset which becomes the property of the assessee in the circumstances mentioned in sub-section (1)]of section 49[ie in case of gift or inheritance or liquidation of a company or under irrevocable trust], there shall be included the period for which the asset was held by the previous owner referred to in the said section.
In your case capital gain will be considered as Long Term capital gain and he would be entitle to get exemption u/s. 54
Posted by
PARIKH ASHISH NARENDRAKUMAR on
Aug 18, 2018
Answer ID :
71926
Yes, Y is the owner of the property due to gift and also claim exemption u/s 54
Posted by
Rakesh Kabra on
Aug 20, 2018
Answer ID :
71928
Yes,Capital Gain will be considered as Long term capital gain in hands of Y and . The period for which the asset was held by the Mr. X (Previous owner) shall be included to calculate the period of holding & entitle to exemption u/s. 54.
Explanation 1(b) to 2(42A) states that in the case of a capital asset which becomes the property of the assessee in the circumstances mentioned in sub-section (1) of section 49, there shall be included the period for which the asset was held by the previous owner referred to in the said section. Property acquired under a gift or will comes under 49(1)(ii).
Posted by
RAMA SHANKAR KAFALTIYA on
Aug 21, 2018