Income tax on capital gain

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Ankur (Querist)
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29 February 2012 My query is that if we sell a residential property and purchase a guest house for employee, can we claim the exemption u/s 54.

CA Nagesh Diddi

CA Nagesh Diddi (Expert)
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29 February 2012 Hello, as per sec.54 where in the case of an assessee being an individual or HUF, the capital gain .e, the income of which is chargeable under the head "Income from house property" will be exempted provided the assessee has purchased or constructed within a said period a Residential house
So as per this provision
New asset should be Residential Property and not commercial. And if you give House on rent to an Employee, it is a Residential Property.
THEREFORE YOU CAN GET THE BENEFIT OF EXEMPTION U/S 54.