Capital gain: exemption u/s 54

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kunal (Querist)
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06 September 2013 dear experts,
Mr. A own one house since 1995..
in may 2012 he entered into an agreemnet to purchase another flat under construction linked payment plan..

in august, 2013 he sold his old house and capital gain comming out to be Rs. 25 lacs..

installments of Rs. 30 lacs are still due toward the purchase of new flat..

now my question is , whether Mr. A claim exemption of Rs. 25 lacs under section 54..
as he entered into a agreement to purchase new house much before than 1 year..

thanks!!!

CA Pallav Singhania

CA Pallav Singhania (Expert)
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06 September 2013 No, Exemption U/S 54 is applicable when the assessee purchased an another property with the one year before or 2 years after the due date of transfer of the property sold

OR

Construction of the residential HP within a period of 3 years from the date of acquisition,
Provided that the new residential HP purchased or constructed is not transfer with a period of 3 year from the date of acquisition...

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kunal

kunal (Querist)
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06 September 2013 sir i agree with you but dont you think this is littel bit harsh on the assessee

please tell if there is any case laws (in favour) regarding the same

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CA Pallav Singhania

CA Pallav Singhania (Expert)
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06 September 2013 Commissioner Of Income-Tax vs J.R. Subramanya Bhat on 9 June, 1986

here is the link below..
http://indiankanoon.org/doc/237769/

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