New Delhi: In a critical ruling as a way to benefit taxpayers, the Mumbai bench of the Income-Tax Appellate Tribunal (ITAT) has held that the blessings of Section 54 ( funding-linked capital gains tax exemption), that’s available on purchase of a brand new house from proceeds of the sale of old belongings, cannot be denied to a taxpayer directly because she has no longer invested from out of the capital advantage proceeds itself, the Times of India mentioned. Earlier, the I-T assessing officer had denied the tax benefit to the taxpayer as the brand-new residence was no longer bought out of the sale proceeds of the first house. The Commission (Appeals) agreed with this stand. Due to this, the taxpayer approached ITAT, which dominated in her favor.
“This useful order will help taxpayers as there could be time gaps between tselling and buyingof the latest residence belongings. Different budgets may be deployed for the new investment. However, it’s important that the new house is bought in the prescribed deadlines,” Ishita Sengupta, tax companion, PwC-India, informed ToI. In a comparable ruling in April last year, the ITAT’s Kolkata bench had dominated that the tax gain cannot be denied simply due to the fact the taxpayer had used the proceeds of a housing loan to buy a new residence and now not the capital benefit proceeds from the vintage house, the daily stated. According to the provisions of Section 54, a taxpayer can claim an income tax deduction if a new residence is sold within twelve months before the sale of present assets or years submits the transaction. In this case, the fee of the brand new house is deducted from the longtime capital gains earned on the sale of the old home. The price of the brand new apartment is more than the LTCG; then, the entire LTCG is exempted from tax. If the fee of the new house is much less than the whole leg, then the last quantity is taxed at 20% after adjustment for inflation.