Benefit of section 54f

Page no : 2

manik (ca in practice) (420 Points)
Replied 03 June 2011

bt my basic question is whether the construction mentioned in the question is eligible to be called as residential house?

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CA NITUL MEHTA (KPMG-Senior Consultant-International Tax ) (236 Points)
Replied 03 June 2011

i dont agree with the above views just becoz a room is constructed it does not constiture a residential house which is habitable as per the direct taxmann volume 3 a residential house is mentioned as one which is habitable for a ordinary human to live in it with our considering any extra ordinayr ciorcumstances so just buying a land and constructing a room does not amount to residential house and he can not claim the exemption,

CA. Roopali Kadam (Jobs on assignment basis.) (1453 Points)
Replied 09 June 2011

Originally posted by : Tax pundit
	Availability of exemption u/s 54F Please note that the LTCG has arisen in this case from sale of land. Hence there is no question of applicability of section 54. Section 54 will apply where the LTCG is from transfer of a residential house whilst section 54F will apply where the asset transferred is one other than a residential house. Akash Gupta is correct in saying that exemption u/s 54F is available, provided that the new construction in the land can be called "residential house". As to hwat is a 'reisdential jouse, common sense meaning will apply. Now to the extent of the land purchased. ofcourse the cost of land willl be added to the building construction, to arrive at the cost of the new residential house. However the extent of the land should be such that it can be said to be 'appurtenant to" the residential house in question. It would be a question of fact. The case has to be presented neatly. First of all, say that the client has constructed a new residential house, not just a small room. Decide on the extent of land which you can call as appurtenant to the said house.