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Income tax returns: Can claim be made under Sec 54 for expenditure on house?

The I-T Act allows rectification of any omission in the return, if it is filed within the due date.

By: | Published: September 19, 2016 6:13 AM
Only return filed within due date under section 139(1) can be revised. (Source: Reuters)

I sold my residential property last year and re-invested in another residential property in this year. I spent money on civil, plumbing, electrical and painting works. Can I claim exemption under Section 54 for the expenditure?
—Amit Tandon

Section 54 of the I-T Act provides for exemption from taxes with respect to long-term capital gains earned on sale of long-term capital asset if the taxpayer purchases or construct a new residential property within the stipulated period. For this purpose, the new property should be capable of being ‘habitable’. It doesn’t impose any conditions as to what constitutes ‘habitable’ to get the benefit of exemption. Since you have incurred expenses for making the new house fit for residential purpose, you can claim benefit under Section 54.

For FY15, besides salary income, I earned short-term capital gains on sale of shares but, forgot to show this gain and belatedly filed ITR 1 instead of ITR 2 in July 2016. Can I revise this return?
—Saurabh Gupta

The I-T Act allows rectification of any omission in the return, if it is filed within the due date. As you have filed a belated return, you cannot revise your return. Only return filed within due date under section 139(1) can be revised.

I hear that seller will collect tax at 1% from purchaser on sale of goods or provision of services in cash exceeding R2 lakh. What if I pay partly in cash and partly in cheque and the cash payment is less than R2 lakh?
—S P Rao

Tax collection at source (TCS) @1% shall not be applicable where the sale consideration received is partly in cash and partly in cheque and cash receipt is less than R2 lakh, even if total sale consideration exceeds R2 lakh. TCS is to be collected on cash component of the sale conside-ration and not on the whole sale consideration.

The writer is founder of RSM Astute Consulting Group

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