Capital Gains on Sale of House in USA_ITR in India

Income Tax Act 1961 Income from Capital Gains
1

A PIO, has become a Resident for two Financial Years 2015-16 and 2016-17 due his Stay in India for More than 182 days. He sold his house in USA in April 2015 and remitted the sale Proceeds to India immediately of US $ 500,000. He says there are no Capital gains as the Purchase price and Sale Price are almost same. However he says there is No capital Gains Tax if the Property sold is for 500,000 US $ and below.
Now this case has been selected for Scrutiny for other Reasons and how to deal with this.

  1. If Capital gains are exempted in USA, in Indian ITR how to make calculation for Capital Gain and claim Relief under DTAA
  2. If what he says is NOT true regarding the Exemption amount, how to show this in Indian ITR
    Is there Long Term Concept(2 years/3 Years holding period)
    Please throw some light on this
2
  1. Is the exemption claim true? No, the US Section 121 primary residence exclusion caps out at $250,000 for single filers ($500,000 for married joint filers) and applies to the gain, not the total sale proceeds.
  2. Holding Period: For FY 2015–16 sales, property held for more than 36 months is considered Long-Term in India.
  3. Indian Tax Liability: As a Resident (ROR), the worldwide gain is fully taxable in India. If no tax was paid in the US due to an exemption, DTAA relief (FTC) cannot be claimed to eliminate Indian tax; the gain must be taxed in India or reinvested under Section 54/54EC.