Exemption u/s 54f

This query is : Resolved

Mihir (Querist)
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23 July 2013 Sold a Commercial property for 17 Lacs. Indexed Cost was say 11 Lacs. LTCG = 6Lacs. The assesee purchased a new house for 50 Lacs but paid only 5 lacs from his own account and remaining 45 lacs was paid by taking bank loan. as only amount of 5 lcas is invested he will get only a proportionate exemption form capital gain. My query is can he deposit money now in bank account under capital gain scheme before due date of return and utilise the money for payment of bank loan and interest....whether that will qualify as investment made?? also the interest and principal paid upto march 2013 qualifies as investment in property??

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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14 August 2013 1. The condition u/s 54F is that the net sale consideration should be invested in a residential house property.

2. There is no condition as to the source of the investment.

3. There is no condition that the amount must be invested by the assessee from his own funds.

4. There is no condition that the amount received on sale of asset should only be invested.

As long as the assessee has invested in a residential house, capital gain will be exempt.

Accordingly in this case, the assessee is eligible for exemption of Rs. 50 lakhs (restricted to Rs. 6 lakhs being the capital gain).