Exemption U/S 54F

This query is : Resolved

Guest

Guest (Querist)

20 August 2008 If an assessee claimes exemption U/S 54F and within 2 years or construct new house within 3 years, he transfers his one residential house (other than that in which investment U/S 54F was made) and purchases another house.

In such a case will exemption earlier allowed u/s 54F will be withdrawn or not.

E.g. A has house A on date of transfer. He invested in house B to claim deduction. Now within stipulated time period (i.e. 2/3 years) he transfers house A and purchases House C. In such a case weather exemption allowed by making investment in house B will be withdrawn or Not?

Thank you.

Kunal Agrawal
kunalagrawal@aol.in
+91-99295-03735

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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21 August 2008 What do you mean by A has house A on date of transfer? Transfer of what?

Guest

Guest (Querist)

21 August 2008 A is the assesse, and
House A means the name of house for understanding. It may be regarded as first house.

Reply as soon as possible.

Thanks

Kunal Agrawal
kunalagrawal@aol.in
+91-99295-03735

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CHEZHIYAN

CHEZHIYAN (Expert)
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21 August 2008 Read This

I had purchased a plot in Greater Noida in 1997 from a developer. I paid full consideration and the possession was taken in Oct 2003. Got the same registered in my name in April 2005.I want to sell the plot and buy a big size apartment for my family . When can I sell the same and buy an apartment for me and get the benefit of LTCG. Is it now or after April 2008 ?I also own one apartment in joint name with my wife in NOIDA . Will it come in way of claiming section 54 benefit when I sell the plot to buy big size apartment.Please advise me on Tax issues involved and most appropriate course of action

If you paid full consideration and taken possession in 2003 , even without registration, the land if sold after 2006 , shall be treated as Long Term Capital Gains. You need to read this .

Since you will be selling Land , you can claim exemption u/s 54F under which if you have more than one house on the date of purchase of new home, then only you are not eligible for exemption u/s 54F .What it means that you are eligible for exemption u/s 54F if you have not more than one house . Section 54F is not applicable in following case as per the proviso given in section 54F itself

"Provided that nothing contained in this sub-section shall apply where
(a) the assessee,
(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or
(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and
(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head Income from house property."
You read this posting . Most appropriate thing for you to do is to sell the land and purchase a property of the size of your choice and claim exemption u/s 54F of the I T Act.