Capital gain exemption

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CA JAIMIN TRIVEDI (Querist)
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20 October 2009 My cleint has sold a residential flat in april 09 for 46lakhs. the capital gain on that transaction was about 22 lakhs. he booked a new flat under construction for 58 lakhs by taking a housing loan of 47 lakhs and balance self payment. the document is registered in july 09. will he get the exemption u/s 54. Is it necessary that there should be nexus between the sale proceeds of the flat and the payment for the new house.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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20 October 2009 Mostly yes but i would be more helpful if the date of payment made for new construction flat was also known.
Also for exemption u/s 54 flat under construction should be completed within 3 years from the date of sale. So you case exemption mostly available.

And also in the recent case of CIT vs. Dr. P. S. Pasricha of the Bombay High Court no nexus required between the sale proceeds of the flat and the payment for the new house