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Capital gain confusion

Pankaj Arora (Job) (150 Points)

08 June 2012

Dear All

I have a confusion in capital gain, that if any person owns a house and reconstruct it completely, then will he get exemption u/s 54 or not. Also if any person buys a residential house and reconstruct it will he be eligible for an exemption u/s 54 for construction, i.e. he will get time of 3 years or not???

If anybody has a refernce of any judicial decision then please let me know.

Thanks in advance

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5 Replies

PADMANABHAN K K (CA) (364 Points)
Replied 08 June 2012

theh assesse sold his property and invested the capital gain within stipulated time in construction of a new floor on another house owned by him, by demolishing the existing floor, it was held that he can claim exemption U/S 54

[CIT vs Narasimhan (PV) (1990) 181 ITR 101 (MAD)].

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Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 08 June 2012

Yes, construction or renovation can be claimed as deduction u/s 54

dheeraj (student) (37 Points)
Replied 08 June 2012

Dude where is the question of capital gain in this case.... If i misread the question then plz explain me,,,

sachdev (ca) (24 Points)
Replied 09 June 2012

Calculation of exemption u/s 54F and Presentation of same in ITR4 in case of deemed short term capital gain arising out of sale of a depriciable asset (factory building) which is a long term capital asset.

Also whether benefit of cost indexation can be availed for same.

sachdev (ca) (24 Points)
Replied 09 June 2012

applicability of sec 44AD and calculation of related turnover in case of an assessee engaged in business of trading in equity shares.(Note: Trading is core business activity of assessee and not included in capital gains)