withdrawal of exemption u/s 54

This query is : Resolved

ankush jain (Querist)
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25 May 2010 An assessee had claimed exemption u/s 54 by purchasing a residential house property and 3 years had not passed since the assessee purchaed that residential house.
Now due to family dispute he wants to transfer the said residential house to his grand son by way of gift.
Q:- Will this transfer result in withdrawal of exemption u/s 54.

CA. RAJESH Kr. MAURYA

CA. RAJESH Kr. MAURYA (Expert)
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25 May 2010 As per Section 54 the new acquired property should not be transferred within 3 years of purchase. But, there is another section i.e. 47 (iii), as per which, if any property transferred as gift (to any person), that would not be considered as transfer.

Hence, no capital gains and consequently, no tax.