18 January 2014
In case the assessee sold one house and has purchased more than one house/flat within the period prescribed in section 54, it is for the assessee to claim relief against the purchase of any one of the house/flat provided the other conditions mentioned in the section are satisfied - K.C. Kaushik v. P.B. Rane, ITO [1990] 84 CTR (Bom.) 62. The exemption under Section 54 is available if capital gain arising from transfer of a residential house is invested in a new residential house within the prescribed time limit. Thus, there is an inbuilt restriction that capital gain arising from the sale of one residential house cannot be invested in more than one residential house. But, there is no restriction that capital gain arising from sale of more than one residential house cannot be invested in one residential house. In case capital gain arising from sale of more than one residential house is invested in one residential house, the condition that capital gain from sale of a residential house should be invested in a new residential house gets fulfilled in each case individually because the capital gain arising from sale of each residential house has been invested is a residential house. Therefore, even if, two flats are sold in two different years and the capital gain arising from the sale of both the flats is invested in one residential house, exemption under section 54 will be available in case of sale of each flat provided the time limit of construction or purchase of the new residential house is fulfilled in case of each flat sold.
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