Section 54

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Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2015 Clarity on Sec 54 needed.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 January 2015 You have not complied with sec 54 requirements. you have not taken possession of the asset.

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Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2015 Thanks Seetharaman ji, I want to know where in Section 54 it mentions one has to take possession of the asset?

No where it states. So why insist on possession?

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Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2015 Kindly refer Sec 54 exactly.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 January 2015 You have to complete the formality after the time limit also else the exemption may be denied.
Further sale of the asset under construction will not qualify you from exemption under capital gains.
Where the assessee transferred only his interests in two flats under construction of which possession was not taken and was not fit for human habitation, such transfer could not be treated as transfer of residential house. Hence, the capital gain derived by the assessee related to a capital asset held by him for a period of more than 36 months and, therefore, the gain arising from the transfer of his rights in the said flats constituted longterm capital gains. The assessee would, therefore, be entitled to grant of exemption under section 54F. [Jagdish Chander Malhotra v ITO (1998) 64 ITD 251 (Del)]

Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2015 Thanks Setharaman ji.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 January 2015 If you avail benefit u/s 54F as stated above(sale of property of any kind), then how you are eligible for sec 54 benefit for house property.
The AO can disallow your claim for sec 54 exemption.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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17 January 2015 The AO has to work in the legal framework only. He can not out rightly reject the claim U/s 54.
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Firstly- this is the case of "Purchase of Property" and not the case of Construction of the Property".
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When the amount of Capital Gains has been invested by the assessee within the time frame provided by the law, for purchasing a residential property, he becomes eligible to get the deduction.
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This section requires -Purchases and not the "Possession". We can say that for this section Purchases includes right to Purchase also.
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In Section 54, the phrase "New Asset" also
has got its own importance. In my view, "New Asset" can cover the right to purchase also.
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So, condition of retaining the "New Asset" for 3 years from the date of its purchases is also being complied with.
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As such, it is not open to the AO to disallow exemption U/s Section 54.
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Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2015 Thanks Bafna Ji.

Pints noted.

Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2015

Thanks for consideration.

Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2015 Thanks all for help.