Section 54 states that exemption from capital gains arising on sale of house property will be available to individuals and HUF if new property is purchased within one year prior to date of sale or within two years after sale.

I have sold a residential house property. I will be purchasing a new property for availing the exemption of Section 54. I and my brother will be joint owner of the new property. However, entire cost of the new property will be borne by me. Will joint ownership create a hurdle in availing benefit of Section 54?

– Pradeeep Kumar

Section 54 states that exemption from capital gains arising on sale of house property will be available to individuals and HUF if new property is purchased within one year prior to date of sale or within two years after sale. The important factor is investment in new property by the taxpayer rather than legal ownership (so long as joint ownership is with close relatives). Exemption will be allowed on the basis of amount of investment made in the new property and not only legal ownership. Thus, even if your brother legally co-owns the property with you, you will be allowed to claim exemption of entire amount of investment made in new property.

I trade in F&O and incurred losses in it. How can I set off this loss against short-term capital gains on sale of shares?

—CP Gehlot

Trading in derivatives is considered as a non-speculative transaction under Section 43(5)(d). Therefore, losses from trading in F&O will be considered non-speculative business loss. A non-speculative business loss can be set off against any other income, except salary income. As such, losses from trading in futures and options can be set off against short term capital gains.
In May 2016, I suffered losses on my boutique shop. I filed income tax return in September 2017. Will I not be able to use the loss against this year’s profit because the return was filed late?

—Ashokan S

In case of an individual not covered under tax audit, the due date for filing return of income for the financial year 2016-17 was July 31 (later extended to August 5). Since you filed your tax return in September, it will be treated as a belated return. In case of a belated return, unadjusted business loss cannot be carried forward to the subsequent financial year to be utilised against future profits. You will not be allowed to carry forward the business loss of FY 2016-17 since the return was filed late by you.