04 August 2017
Hello Sir I want your expert advise on the matter. My friend has sold his flat in May 2016 and purchased a Plot of land from the developer for which hew got the agreement in June 2016. The letter of allotment will be issued next month. Can we take exemption u/s 54 of the income tax or not. If yes then what will be shown in return form. Pl advise. I have to file return for the asstt yr 2017-18. Regards
04 August 2017
Exemption has got nothing to with the date of allotment. All that matters is that entire long term capital gains from the sale / transfer of assessee's property should be reinvested in the new property within the time period
04 August 2017
For claiming exemption of Long term capital gains by way of Purchasing or constructing a residential property is : 1) one year before the date of sale of your property or two years after the date of sale of your property, in case you are investing the entire capital gains to purchase a residential property
2) within 3 years from the date of sale of your property, in case you are using the entire capital gains to construct a new property.
05 August 2017
Exemption U/S 54 F is available when you sell any asset other than a residential house and invest the proceeds into purchasing or constructing a residential house.
In your case your friend has sold his residential property and invested the proceeds in purchase of land.
This transaction is not covered by Section 54F and hence no exemption will be available.
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