babugr (dgm) (509 Points)
23 April 2015Dear experts,
Kindly advise me on the following. One of my sr. Citizen friends is selling his residential property now which he got it as gift from his grand mother. He is planning to buy a residential property out of the proceeds, after buying the property he is left with significant amount in hand. Can he purchase another flat and avail section 54 F benefit.
Thanks
G R Babu
Giridhar S Karandikar
(Team Lead)
(7543 Points)
Replied 23 April 2015
No he can't avail the benefit under 54F, because under that section benefit can be availed by investing in residential property only if the asset sold is other than residential property.
So in your case you can invest the balance Capital Gains in 54EC bonds upto maximum Rs.50lacs and if there's still in CG remaining then you need to pay CG tax on it @ 20%
CA HAYEDAR SHAIKH
(Practice )
(622 Points)
Replied 23 April 2015
Hi Babu,
No, because the assessee can claim deduction u/s 54F in case of investing in not more than one Residential house. The Bombay High Court in the case of K.C. Kaushik v. P.B. Rane [1990] held that deduction under the said section will be available only against one house of assessee’s choice.
Otherwise, you should invest as told by Giridhar.
babugr
(dgm)
(509 Points)
Replied 23 April 2015
K.T.Antony
(Chartered Accountant)
(68 Points)
Replied 23 April 2015
Since the sale is a residential house, it comes under Section 54. Only one house can be bought. If adjacent flats are purchased and by providibg a common passage, it has to be considered as a single unit and avail exemption. There are cases in favour.
K.T.Antony
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