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Exemption U/s 54

Abhay Pai (Chartered Accountant) (30 Points)

11 January 2011

I am a student.If I sell a residential house property on 22-03-2010. It was a Long term Asset. Further I also purchase another residential property on 26-12-2010. Can I claim exemption u/s 54 for the same ? I have not yet filed my returns as i have no other sources of income. Should I have invested in Capital Account Gains Deposit in order to claim exemption

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9 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 11 January 2011

Ya yes u can take ememption u /s 54. After investing in new property if it is still there any capital gain than it is taxable. Or u can invest this capital gain in capital gain account deposit for exemption.

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Nilesh Jain (Assistant Manager) (1064 Points)
Replied 11 January 2011

agree with pankaj.........

CA MAULIK (C.A) (937 Points)
Replied 11 January 2011

Yes definately u can claim the excemption of section 54.......

Manish Dokwal (STUDENT) (59 Points)
Replied 11 January 2011

Yes exemption can be claimed since the residential house purchased is well before 2 years as given u/s 54.....!!

Tanumoy Bhowmick (CA IPCC student) (34 Points)
Replied 11 January 2011

YES, U CAN CLAIM EXEMPTION u/s 54. AS PER THE INCOME TAX ACT, 1961'S SECTION 54 IF AN ASSESSEE SELLS A HOUSE PROPERTY AND PURCHASES ANOTHER HOUSE PROPERTY WITH THE CONSIDERATION HE HAS RECEIVED THEN THE CAPITAL GAIN ARISING THEREIN IS EXEMPTED. AND IF THE ASSESSEE DOES NOT PURCHASE A HOUSE PROPERTY IMMIDIATELY , HE MAY KEEP THE AMONT IN A CAPITAL GAIN ACCOUNT SCHEME OF A NATIONALISED BANK TILL THE PRESCRIBED PERIOD. AND AFTER THE PRESCRIBED PERIOD EXPIRES AND STILL HE HAS NOT INVESTED THE AMONT IN A NEW HOUSE PROPERTY , THEN THE AMOUTN KEPT IN THE SCHEME WILL BE CHARGED TO CAPITAL GAIN IN THE PREVIOUS YEAR IN WHICH THE PRESCRIBED PERIOD EXPIRES.......

WOAH....THAT WAS QUITE A SPEECH I GAVE . SORRY GUYS, BECAUSE OF ITS PYTHONIC LENGTH....!!

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Jitender (Head of Audit & Taxation Deptt) (38 Points)
Replied 12 January 2011

Dear according to me U can not claim Exemption Under Section 54 for Investing CG in HP as u have to deposit the amont in Capital Gain Account on or before due date of filing the Return.. which was 31st july, 2010. u have crossed the time limit so now u can not claim exemption.. Exemption u/s 54 is available for purchasing a HP within 2years only & only if u have invested that CG amount in CG account scheme on or before due date of filing the return.

vinayak (article clerk) (62 Points)
Replied 12 January 2011

Yes you can Claim Exemption u/s 54, u have to deposit capital gain in capital gain deposit account before due date of filing of return.

Jitender (Head of Audit & Taxation Deptt) (38 Points)
Replied 12 January 2011

dear frnds read the question carefully..

he sold the property in last year ended on 31/03/2010 for which due date for claiming the deduction by way of depositing the amount in CGA was 31st July, 2010. which is crossed already..

then how can he claim deduction under section 54...???????????

for more details check out the provisions contained in Section 54

CA PARAS BAFNA (Practising CA ) (33423 Points)
Replied 12 January 2011

Jitendra Sir is right. The amount of capital gain ,if has not been utilised, before 31.7.2010, then the amount was supposed to be deposited in Capital Gain A/c prior to 31.7.2010 and the same could be withdrawn for purchase of property during the prescribed time limit of 2 years from the date of transfer.