Do you have any personal income tax query?
Mihir Tanna, Associate Director, S K Patodia & Associates (external link), a chartered accountants firm that offers consultancy, audit and tax services, answers your queries.
Please mail your queries at email@example.com with the subject line Ask Mihir and Mr Tanna will answer all your tax queries.
Devendra Pandey: Good Morning. I am a fan of yours and read you severally on Rediff replying queries of various Tax Problems. Sir, now I have a tax query and earnestly request you to resolve that which is as follows:
My query is: I booked an under construction flat worth Rs.45.00 lacs which is scheduled to be ready for procession in year F.Y.2025-26.
Now I sold shares worth Rs. 10,00,000/- and total amount paid to builder in F.Y.2022-23. Out of shares sold my LTCG IS Rs.700,000/-.
Can I claim exemption for LTCG to that amount only which is given as advance in corresponding year?
Again in F.Y. 2023-24 I will pay Rs.20,00,000/- by selling shares and LTCG of Rs.10,00,000/-.
Can I claim Exemption for LTCG?
Same process will happen in next 2 F.Ys. till procession of my new Flat. Can I claim exemption on LTCG on sale of shares in each financial year?
Please also guide to fill ITR also for claiming above exemption in parts.
Mihir Tanna: In respect of capital gains you can claim exemption from long term capital gains if the net sale consideration is invested in booking an under construction house. You get an extended period of three years to get possession in case it is booked with a developer.
In case the sale consideration is not fully invested in the residential house before filing of the Income Tax Return, the unutilised money has to be deposited with a bank under Capital Gains Account Scheme. The money deposited can be utilised within the prescribed period for payment of house.
You have to keep in mind that to claim this exemption, you should not own more than one residential house property on the date of sale of the shares except the one in respect of which you are claiming the exemption.
So once you claim exemption in FY 22 23, it is not advisable to claim exemption against gain earned in subsequent years.
In Income Tax Return, you can show the amount invested in property as exemption u/s 54F and if the entire 10 lakh consideration can not be invested in property then open CG account and show amount in ITR accordingly.
S Purna Chandra Rao: I have filed my income tax return for FY 2021-22 before due date i.e. 31.07.22 with some refund amount. Recently when the refund not received, I have checked with income tax site where I found that notice has been issued u/s 139(9) and the period of 15 days also lapsed for responding the notice. I have not noticed/received the mail sent by Income tax department or might have been deleted by mistake. Please guide me what to do next. I am waiting for your reply eagerly.
Mihir Tanna: In case reply to notice u/s 139(9) is not filed within time limit, filed ITR is considered as defective. In other words, it will be considered as if you have not filed ITR within the due date.
Accordingly, it is advisable to file a belated ITR before 31.12.2022 (after correcting errors mentioned in the notice).
Further, in such a case, you will be required to pay additional fee and penal interest (if applicable).
Pratima Bajpai: If I put my royalty income under the head “Profits and Gains of Business or Profession” then which ITR form I am supposed to fill - ITR 3 or ITR 4?
Mihir Tanna: ITR form will depend on the fact that Royalty is out of main business activity carried out by you OR Income from other sources. ITR 3 and 4 both are applicable for Income from Business and Profession (subject to other conditions).
Main difference is that ITR 4 is applicable if you are eligible and opting for presumptive taxation as per Sec 44AD/44ADA.
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