CMA Sameer Epari (CA Final Student) (409 Points)
01 December 2011Dear All,
Please Suggest me on this:
My Client has sold a land in 2010 but he got advance for the same in the year of 2009 and he purchased a land and started construction in 2009 it self ...my question is whether can he claim any capital gain exemption for this.if so please give me some case laws for the same.
Thanks..
Z
( )
(2965 Points)
Replied 01 December 2011
It is clearly stated in sec 54 and sec 54 f that the assesse should invest in construction of house property within 3 years from the date of transfer. Investment in construction should be AFTER THE DATE OF TRANSFER. Had it been purchase then it would have been allowed in the given situation
However any amount invested after the date of transfer shall be eligible for exemption.
Assesse is eligible for exemption in case of purchase of land uppertenant to the building or on investment in land which building is being constructed . So if you can bring the present situation in the above case then such exemption can be availed.
varun rawlani
(CA)
(31 Points)
Replied 01 December 2011
plz clearify whether it long term asset or short term asset , and also whether it is agricultural land or other land and then refer various subsections of section 54.
CMA Sameer Epari
(CA Final Student)
(409 Points)
Replied 01 December 2011
IT IS NOT AN AGRICULTURAL LAND AND IS A LONG TERM CAPITAL GAIN.WHAT IS THE DATE OF TRANFFER IN THIS CASE.
CA LALIT WADHWA
(FRESHER)
(105 Points)
Replied 13 December 2011
IN LONG TERM CAPITAL ASSET ONE CAN CLAIM DEDUCTION U/S 54F..
PROVIDED-
1-HOUSE COMPLETED BEFORE ONE YEAR OR AFTER 3 YEARS FROM DATE OF TRANSFER...
2-ASSESEE DOES'T OWN MORE THEN ONE RESIDENTIAL HOUSE..
3-HOUSE CONSTRUCTED SHOULD BE A RESIDENTIAL ONE...
no need of case law...section itself provide exemption...
Z
( )
(2965 Points)
Replied 16 December 2011
I think theres need for case law
Construction cannot precede sale of old house - To claim exemption under section 54, the construction of the new house should be within two years after the transfer of the existing house. The exemption is not available where the new construction is made before the transfer or sale of the existing house - Smt. Shantaben P. Gandhi v. CIT [1981] 129 ITR 218 (Guj.).
Contra
( I Read this recently)
Exemption on capital gains could not be refused to the assessee simply on the ground that the construction of the new house had begun before the sale of the old house - CIT v. H.K. Kapoor [1998] 150 CTR (All.) 128.
@ Lalit Wadwha
1-HOUSE COMPLETED BEFORE ONE YEAR OR AFTER 3 YEARS FROM DATE OF TRANSFER..."
I did not found that one year before part (for construction) in the Act can you kindly cite?
In my knowledge its one year before or two years after the date of transfer for the purpose of PURCHASE
Furtherm the INVESTMENT is to be made in specified time limit and COMPLETION of construction does not matter for this following case laws may be reffered
B.B. Sarkar v. CIT [1981] 132 ITR 150 (Cal.)
Satish Chandra Gupta v. Assessing Officer [1995] 54 ITD 508
Commissioner of Income-tax v. R.L. Sood
more detail in this post
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