Tax sop available even if capital gains not used for new house
Mumbai: The Income-Tax Appellate Tribunal (ITAT)’s Mumbai bench has held that the investment-linked capital gains tax exemption, available on purchase of a new house, cannot be denied to a taxpayer merely for not investing the capital gain proceeds. The I-T officer had denied the tax benefit as the investment made towards purchase of the new house “was not out of the taxpayer’s own funds”. The commission (appeals) agreed with this stand. The taxpayer thereafter approached the ITAT, which passed an order in her favour. Capital gains are taxable under the I-T Act. If a taxpayer makes a profit on the sale of a residential house held for at least two years, then such profit is treated as a longterm capital gain (LTCG). This gain is taxable at 20% with an adjustment for inflation, referred to as indexation benefit. Ishita Sengupta, tax partner, PwC India, says: “This beneficial order will help taxpayers as practically there could be time gaps in real estate deals between the sale