Q I had purchased a flat at Hyderabad in 2009 for '12.5 lakh. I have sold it in January 2018 for '30 lakh for my daughter's wedding. What would be its tax implications?
Venkatesh Hubli
A) The cost of acquisition of your flat includes the registration and stamp duty charges. As your query is silent on the registration charges incurred, the computation of LTCG and the tax liability is done on Rs 12.5 lakhs, as stated in your query. Therefore, LTCG on sale after indexation will be '7,02,700.
The LTCG is taxed at a rate of 20.6 per cent. So your tax liability will be '1,44,756. The LTCG computed above may be corrected after adding the registration charges to the cost and computed accordingly.
It may also be noted that in case your total income is below the threshold limit, the difference between that threshold limit and your income will be eligible for set off from LTCG computed above and tax at the rate of 20.6 per cent has to be paid as the balance amount.
Q I had filed my original return within the prescribed time. In this return, I had carried forward a business loss of '5.5 lakhs. But later filed a a revised return increasing the loss to be carried forward to '7 lakh. The Assessing Officer has made an assessment order under Section 143(3) determining the loss to be carried forward at '7 lakh. I have received a notice U/s 154 proposing to rectify the mistake in the order and stating that I will be eligible to carry forward only '5.5 lakh. Kindly clarify whether I will be eligible to car-ry forward the loss of '7 lakhs.
Akshay Singhania
Hyderabad
A) If a loss is incurred, being a business loss, the same can be carried forward only if the return is filed within the due date stipulated. A loss return furnished under Section 139(3) is deemed to have been filed under Section 139(1). So, a loss return can also be revised under Section 139(5). The enhanced loss returned by you through the revised return can be carried forward and set off against the business income within a period of eight assessing years immediately succeeding the assessment year in which the loss is first computed.
However, if there is any mistake in the loss as claimed by you, which is reduced by the AO in assessment or rectification proceedings, only such reduced loss can be carried forward. It is not clear from your query if there is any such mistake in the claim made by you. But AO cannot deny the benefit of carry forward of loss to the extent of '7 lakh merely because it was claimed furnishing a revised return.
