Question ID : 32779

Capital Gain

Three Ladies Joint owners of a commercial property (purchased in 1998)having 1/3 share each have gifted their shares to their husbands who are brothers also in 2018-19. And Then the two brothers have surrendered their share in favour of Third Brother same year. Now the Third Brother fully owner of the property wants to sell the property I think this will be treated as Long term Capital gain with indexation benefit available since 1998. If he purchases a residential property with the amount of capital gain I think he need not pay any Capital gain. Am I Correct?

YES U R CORRECT, ACCORDING TO EXPLANATION 1 TO SECTION 2 (42A) , PERIOD OF HOLDING SHALL INCLUDE THE PERIOD FOR WHICH IT WAS HELD BY THE PREVIOUS OWNER. SINCE IN YOUR CASE THE PERIOD OF HOLDING IS MORE THAN 36 MONTHS, THEREFORE THE ABOVE MENTIONED COMMERCIAL PROPERTY IS A LONG TERM CAPITAL ASSET. NOTE: EXEMPTION CAN BE CLAIMED U/S 54F