Section 54 of Income Tax Act

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Querist : Anonymous

Querist : Anonymous (Querist)

21 June 2010 Under Sectin 54 of the Income Tax Act exemtion from Income Tax in case capital gains from transfer of a Residential Property in case the capital gains are invested in a residential property in the manner provided in the said section. In case the assesse has entered into an Agreement with a Builder for purchase of a flat and sells the same after expiry of 36 months from the date of the Agreement but the flat is still unders construction, Will he be entitled to benefit under Section 54.

daya shankar singh

daya shankar singh (Expert)
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21 June 2010 No, the amount is taxable as STCG in the year of sale because the sale of RP is before the completion of three years

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Querist : Anonymous

Querist : Anonymous (Querist)

21 June 2010 Thanks for your Advice. Please note that the Agreement for purchase was entered more than 36 months before the transfer of the Agreement. Hence it is a Long Term Capital Asset. The issue here is that the property for which the Agreement was entered is still not constructed and when constructed it will be a residential flat. Under these circumstances please clarify whether the Long Term Capital Gain will be entitled for benefit u/s 54 if the said property is still under construction at the time of transfer

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daya shankar singh

daya shankar singh (Expert)
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22 June 2010 For the purpose of 3years, the actual posession of property shall be considered. In ur case the exemption of sec 54 is not available because property is still under construction.

Querist : Anonymous

Querist : Anonymous (Querist)

23 June 2010 Thanks for the reply. Can the Assess take the benefit of Section 54F.