Originally posted by : CA.Swathi Jain |
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Thank you Mr.Md for the clear explanation.
Mr.Saiyum khan, if the intention of the section was to utilise only the capital gain fund for purchase of the house then the time limit of purchase of house 1 year before sale of original asset would not have been provided in the section.
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Swathi, Pls. go through the following decision carefully. Hope this will clear the doubt.
Latest decision in Miian Sharad Ruparei vs ACIT(supra)
In this case assessee earned LTCG on sale of shares and reinvested in
residentialhouse claiming deduction uis.54F. The net-consideration
on saie of Shares was Rs. 17,28,686 and assessee purchased a new
flat for Rs. 17,29,355. Bank loan of Rs. 15 lacs was taken for
investment in flat. AO noted that major portion of house was
financed by bank. A0 therefore disallowed the exemption to the
extent itwasfinanced by bank.
The ITAT confirmed the order ofAO and held that section 54F{1] shall
be read with section 54F{4}. If both these sub-sections are read in
conjunction only one inference is drawn that to avail of the benefit of
section 54F, the assessee is required either to purchase or
(7\
construction a residential house out of the sale proceeds of LTCG
within specified period. If assessee is not able to appropriate the sale
proceeds upto due date, same shall be deposited in Capital Gain
Account Scheme. In giving this decision, the ITAT discussed the
decisions of ITO vs l<.C. Gopalan {supra}, Smt. Prema P. Shah {supra},
Bombay Housing Corpn. (supra)
In para 13 interestingly held that it is not thatthe same amount shall
be invested in the new house. But, the fund should be available with
the assessee forits investment in residential house. The law does not
expect that the sale amount should be kept in locker and the same
should be utilized in purchase of residential house. Neither the law
nor does any circular require the identity of the amount received on
sale and utilization for purposes of section 54F and other relevant
provisions. It is quite likely that the assessee may use the money for
his business and draw the amount for investment from his past
savings. Since money has no color, all that is required is compliance
with the condition of investment within specified time.
on saie of Shares was Rs. 17,28,686 and assessee purchased a new
flat for Rs. 17,29,355. Bank loan of Rs. 15 lacs was taken for
investment in flat. AO noted that major portion of house was
financed by bank. A0 therefore disallowed the exemption to the
extent itwasfinanced by bank.
The ITAT confirmed the order ofAO and held that section 54F{1] shall
be read with section 54F{4}. If both these sub-sections are read in
conjunction only one inference is drawn that to avail of the benefit of
section 54F, the assessee is required either to purchase or