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exemption u/s 54F

silky jain (chartered accountant) (167 Points)

25 March 2009

Exemption U/s 54F is available on long term capital gain if investment of net cosideration is made in residential house.i want to know whether investment done in residential plot is eligible investment.

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2 Replies

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 25 March 2009

If the assessee plans to construct a residential house on this plot, within specified period; and not transfer the residential house for specified period- the benefit can be taken.

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CA CS CIMA Prakash Somani (Landmark Group) (23502 Points)
Replied 25 March 2009

Q What is specified period??

Ans: Section 54F provide for a deduction in cases where an assessee has, within a period of one year before or two years after the date on which the transfer of a capital asset takes place, purchased, or has within a period of three years after that date constructed, a residential house.

The quantum of deduction is itself dependent upon the cost of such new asset. It has been represented to the Board that the cost of construction of the residential house should be taken to include the cost of the plot as, in a situation of purchase of any house property, the consideration paid generally includes the consideration for the plot also.