Long term capital gain u/s 54

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CA SACHIN UPADHYAY (Querist)
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29 January 2013 My friend deposited long term capital gain amount in the CGDScheme and now he wants to utilize the same amount to purchase plot... but as per provision residential property is allowed to be purchased or constructed within the prescribed time period.

Is there any case reference where there is an ratio to be invested for plot cost + construction cost of it.

For eg. plot of Rs. 50 lacs and construction of only Rs. 2 lacs (i.e. adhoc four side wall to be constructed on the plot)

kunal

kunal (Expert)
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30 January 2013 see exemption is given for the purchase or construction of RESIDENTIAL house property..
is that constructed structure qualify for residential purpose??
if yes, i don't think there's any problem

thanks

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CA SACHIN UPADHYAY

CA SACHIN UPADHYAY (Querist)
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30 January 2013 Thanks kunal sir, that what i think... as per the definition of residential house property in income tax act.. if it satisfies then the same is ok...

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Anand

Anand (Expert)
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01 February 2013 I am sorry but buying a plot and constructing fencing around it does not qualify the same as a residential house property. I think it is not a good move to claim exemption like this.

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CA SACHIN UPADHYAY

CA SACHIN UPADHYAY (Querist)
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03 February 2013 Anand sir, the friend of mine is not only going to do the fencing, but he is also goin to construct a small four wall and roof called house, for which the investment of construction cost will be too nominal... just for the sake of formality...

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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27 July 2013 When the provision has been made for deduction for investment in House Property then you cannot deviate from it and if you follow the provision then you are benefited other wise you have to pay the tax. If you buy the land construct the boundary line or make a small hut then it is not permitted as the house property if it is constructed the the area should not be left open more than 1/3rd of the total area.