26 October 2012
Hi, kindly clarify the following for FY 2012-13. 1.Have sold LAND - A (residential land) and claimed 54F exemption on the purchase of a HOUSE - B (Residential house) in the FY 2010-11 (both in the same year. At that time of purchase of house-B had ONE more house HOUSE - A only, now to be termed as OLD RESIDENTIAL HOUSE.
2. In the year 2012-13 sold LAND - B. Can I avail section 54F for this FY 2012-13, if I proceed and invest the entire sale consideration obtained in the sale of LAND-B, for constructing an apartment unit, by demolishing HOUSE - A (OLD RESIDENTIAL HOUSE). The apartment unit will be completed fully and a completion certificate will be obtained during the month of AUGUST 2013.
27 October 2012
Dear sudarshan, At the time of sale of LAND - B, the OLD RESIDENTIAL HOUSE A was already demolished and the construction of the apartment complex with one unit for my self had started in november 2011. The land - b was sold in may 2012.
The whole complex including my one residential unit will be COMPLETED IN AUGUST 2013 ONLY, by the time which 3 years would have elapsed from taking the initial 54F exemption.
27 October 2012
if ur land had tamarind or coconut trees or any flowers growing, then it will qualify under agriculture so no tax liable. if barren land after demolition also no tax as you will have no value for the land when purchased as a plain land and after buy you constructed but you leveled it to ground so how will u call residential as residential qualification can come when u have some building to come under definition of a residence. ur land is just a landed immovable and you cannot just stay with no roofs. Without roofs u cannot call it as a residence is it not! Any way you want to construct a residence yes you can construct a residence. then value appreciates when as a residence, then indexation follows when you sell that residence. then it qualifies under sec 54f is my view,but anyway look to a CA's advice!
27 October 2012
3 years period to be calculated from sale of land B.(original asset) till may 2015. Nowhere it is mentioned from initial 54F exemption.
Exemption under section 54F is available if the following conditions are satisfied.
1. The assessee is an individual or a hindu unidivided family. 2. The asset is transferred is any long term capital asset but other than a residential house. 3. The assessee has purchased within one year before the date of transfer or 2 years after the date of transfer or constructed within 3 years after the date of transfer a residential house (hereafter referred as " new house")
Following points should be kept in view.
1. Date of commmencement of construction is not relevant. 2. The assess should not sell or transfer the new house within 3 years of its purchase or construction. 3. The assessee should not own on the date of trsnfer of the original asset more than one residential house other than the new house. He should also not purchase within a period of two years after such date or construct within a period of 3 years after such date any residential house (other than the new house).
Kindly go through the section 54F exemption creteria and reply again sir. Also kindly explain "after such date" meaning which date.
27 October 2012
i look at your proposition just as an advocate as i test the rules on the anvils o natural justice based rule of law as very constitution of india is a simple rule of law of people of india. Income tax Acts and rules are just not sacrosanct but subject to tests on the anvils of constitution. IT Rules change every year as per the wish of great FM at union so not sacrosanct and indeed questionable like any law under constitution of india and indeed that is the job of any advocate and the bench to assess or reassess the veracity of any law, after all as Nani Palkiwala said IT is a disgrace to the Nation as rules are some kind of Execution instruction so it has to be checked and rechecked again and again. No passive acceptance is possible on Income tax laws and rules as several times there tax laws fail natural justice principles please. If one wants to be passive let him be but as lawyers we cannot accept any law passively so we are advocates and benches have judges! Judges cannot passively accept any law as sacrosanct, after all today sovereign is citizens of a nation not Kings any more so no divine right please!
27 October 2012
ok . in that case, house B purchased in FY 2010-11 was the new asset on sale of land A. so if you construct any house, within 3 years of sale of land A ie till FY 2013-14, would not you lose exemption?
27 October 2012
After all tax collected has to be legally used for the benefit of people and taxes cannot be exorbitant if exorbitant such taxes can be struck down by courts so courts are there and the courts need not necessarily be passive to any government statutes so we in our constitution Art 226 to review any law or rules of any government. We had 1st Amendment with schedule IX which was meekly accepted by constitutional courts and the government went head long so in 2007 then CJI Y K Sabharwal struck down schedule IX from 1st Xonstitutional amendment on Coelho v st of Tamil Nadu after several years of deliberation. So citizens need to question every piece o section in any legislation as statutes are not just universal as facts are also not just universal has to be noted by every professional is my view. All the more Advocates job is to dissect every section and argue before benches and benches also are duty bound to thoroughly examine the sections against facts of issues. Else we will not need courts judges and advocates please, as no passive submission is acceptable to government legislation however irrational they are and that may affect the peaceful life of citizens that is the basic feature of any constitution even in unwritten constitutions so common laws prevail please!
1. The original asset LAND - A was sold on 30th June 2009 and 2. The House House - B was bought on 16th July 2009, i.e FY 2009-10 (AY 2010-11). 3. Construction of a house means not starting of construction but the completion of construction, isn't it. That will definetely be completed in August 2013.
Clarify the following.
1. Kindly clarify what is termed as original asset. 2. with the above facts will not my HOUSE - B now be the old house and the apartment unit that I am constructing be the new house. 3. Construction of the house means completion of the house and not starting of the house construction.
thanks very much for taking time in replying promptly.
28 October 2012
first you take land A which is original asset. It was sold and new house(new asset) B was bought. eligible for 54F. you are calculating exemption us54F in another year by selling land B. you are not having more than one house at the time of selling land B. perfect for exemption us 54F. But you should not construct any house other than (house B) within 3 years of sale of land A which is original asset. now refer point no.3 above
Sale of Land A - original asset - sold on 30th june 2009. 3 years from then i should not construct any house other than house B. - i.e., upto 30th june 2012, I should not construct any other house other than HOUSE - B.
Now construction of the house means "COMPLETION OF THE HOUSE", not starting of construction. Since I will be using the funds got from selling of LAND - B only after 30th June 2012, for the purpose of the construction of a unit in the apartment and it eventually completes its construction in August 2013, i should be eligible for 54F exemption. Isn't that right.
What do you mean by construction of the house, is it starting or completion? Kindly clarify.
30 October 2012
initially it was mentioned that land A was sold in FY 10-11(see the posting initially) and now it is mentioned FY 9-10. Even the construction is completed after 3 years you may have to deposit in CG scheme .There is an intention to construct the house. It is not mentioned in the Act , construction should be completed after 3 years. If any case law is there, you pls share.
1. I did not see my sale deed properly and while I was drafting the query i thought it was 2010-11. It is 100% 30th june 2009, i.e FY 2009-10 2 I need to deposit in capital gain account scheme, only if it is not utilised within 31st july of the next assessment year. I am surprised that you are not aware of this too. 3. I have an intention of construction of the house, and mere intention will not make me subject to tax. When it is mentioned construction in 3 years, that literally means COMPLETION as far as I know and starting of construction is irrelevant for this purpose. I don't know any case laws. I put query in ca club only to be enlightened about this meaning of construction by you. Kindly take some time and find and reply. I am a civil engineer in profession, and i only get educated about relevant laws on my usage basis over the net.
thanks for all your prompt replies. I appreciate if you could get me some case laws stating that the construction meaning is completion and not starting.
CAclubindia
