exemption section 54

This query is : Open

gaurav sharma (Querist)
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17 December 2017 if someone bought a land in FY 2012 and sold it in FY 2014 arising capital gain. he has been constructing his another residential property since 2012 to 2015,which he bought inFY Oct 2012. Can he claim exemption for expense over construction which belong to the duration before the date of sale of old asset I.e. FY 2014.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 December 2017 Section 54 exemption available only for purchase before sales and not for construction of house before sales.

Z (Expert)
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18 December 2017 There are a few cases wherein exemption was allowed.
There are lots of litigations in this section. Earlier, when I started taking these cases I was enjoying them, but after studying so many judgements on S.54 and 54F I have kind of lost the interest and the litigations still persist.

[CA R SEETHARAMAN has provided a very safe advise, and my opinion is not against his. I am merely adding some more facts.

Anyhow, the crux from my past experience.

One court held that exemption should be allowed if the construction was started but not completed before the one year period. Since the construction would be COMPLETED after the date of transfer, the condition of construction would be completed only within the permissible period of 3 years.

My personal view is that exemption should be allowed even if the construction was completed prior to the date of construction because when we read the memorandum, we find that these sections were inserted to help the assessee to relocate easily and also to encourage the infrastructure.
Looking at the intention, the exemption should be allowed, further, if exemption is allowed for the purpose of purchase and not for the purpose of construction then such a provision lacks equality.

Anyhow, take the risk if the High Court of your state has passed a favourable judgement. Otherwise, there are more than 10000 cases on these sections... and we might be adding few more.

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gaurav sharma

gaurav sharma (Querist)
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18 December 2017 thanks alot Z and mr. seetharaman