Man sells ancestral land for Rs 8 cr, claims LTCG; tax dept rejects & adds Rs 6.36 cr
A taxpayer is challenging an income tax assessment after being denied exemptions on long-term capital gains from the sale of ancestral land. The tax department rejected his claims under Sections 54B and 54F, citing the ownership of multiple residential properties and the commercial use of a property.
Why it matters
This case illustrates the complexities of Indian tax law regarding capital gains exemptions and the importance of proper documentation for property transactions.
When selling assets and claiming long-term capital gains, it is important to understand if you are eligible and under what conditions can you claim LTCG.A man sold his family’s ancestral agricultural land and claimed long-term capital gains exemption because he purchased two properties from the money. However, his exemptions under Section 54B and Section 54F were denied, leading to tax additions and a notice.What the case is aboutThe man, a resident of Panchkula, disposed of his family farm land in a village for Rs 8 crore in 2017. Heathen bought two properties in Chhat and Sanoli villages and sought long-term capital gains (LTCG) tax relief under Sections 54B and 54F. The man also owned a restaurant in Dhakoli, which had his office as well.In the tax return that he filed, the man declared LTCG of Rs 7.73 crore after accounting for certain expenses.
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