Mr A sold his flat and had capital gain. He purchased a plot at his native and started construction of a house on it. Will this be eligible for exception u/s 54, as he purchased a plot and then constructing the house?
04 July 2023
Sir, section 54 would be applicable na???? ...as flat being residential unit is sold and land plot is purchased and the new house is being constructed ....
05 July 2023
Sir, the person has first bought the plot of land and then started construction of the house, would then also exemption u/s 54 be available???
05 July 2023
Yes, house has to be constructed within 3 years from the date of sale of old house property. Till such time the LT CG amount from the house sold, has to be parked in CGAS. 1988 account of any public sector bank, from where he can utilize the funds for construction of new house.
07 July 2023
Sir, if only plot of land is purchased and no construction is carried out nor any plans to carry out any construction of the house, then exemption u/s 54 wont be available to Mr A .... right????
08 July 2023
Sir, In present case, the property was sold on 23-3-2023 and capital gain of Rs. 850000/- arose. The Mr A made following date wise payments: 12/12/2022 Rs. 1000 for plot purchase 13/12/2022 Rs. 50000 for plot purchase 06/03/2023 Rs. 180000 for plot purchase 06/03/2023 Rs. 370000 for construction 02/04/2023 Rs. 400000 for construction Thus totalling to Rs. 10,01,000/- so while filing ITR for FY 2022-23, can Mr A claim entire 10,01,000/- as exemption against this capital gain of Rs. 850,000/- , though some payments were made before the sale agreement?
08 July 2023
It is debatable issue. Some professional only accept the expenses incurred after sell of the original asset for exemption. There by Rs. 4 lakhs and any other after that till 3 years are allowed u/s. 54. While some professional consider all the expenses from 1 year before to the completion within 3 years as deduction if the house gets completed within 3 years of sell of original asset.
09 July 2023
Dear Sir, I found this in Taxguru site: https://taxguru.in/income-tax/section-54-land-value-includible-cost-residential-house.html It was argued that the start of construction before the date of sale of property is not the criteria u/s 54 but the completion of the construction of new proeprty should be done within 3 years from the date of sale of old property, so the construction expenses incurred even before the date of sale of old property is allowed. Sir, request you to got through the link and guide. Regards, Suraj
09 July 2023
My dear, already considered it in second option ... "... If house gets completed within 3 years from sell of original asset." I said it is debatable, there are both views prevalent, you may choose at your own discretion.
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