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Failure to purchase asset (sec 54f)

NISHA AGARWAL (Chartered Accountant) (454 Points)

13 March 2018

What shall be the consequence if the assessee fails to purchase the asset within the prescribed time frame u/s 54F ? Further how shall the same be treated in the income tax return?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (180946 Points)
Replied 13 March 2018

The capital gains on the transfer of the original property is taxable in the year in which it is sold. The capital gain would be taxable; unless the unutilized amount of sale proceeds are deposited under the Capital Gains Account Scheme, before filing ITR of PY.

In case the assessee deposits the amount in the Capital Gains Account Scheme but does not utilise the amount deposited for the purchase or construction of a residential house within the specified period, the amount not so utilised shall be charged as capital gains of the year in which the period of 3 years from the date of sale of the original asset expires and it will be long-term capital gain of that previous year.

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NISHA AGARWAL (Chartered Accountant) (454 Points)
Replied 16 March 2018

Originally posted by : Dhirajlal Rambhia
	The capital gains on the transfer of the original property is taxable in the year in which it is sold. The capital gain would be taxable; unless the unutilized amount of sale proceeds are deposited under the Capital Gains Account Scheme, before filing ITR of PY. In case the assessee deposits the amount in the Capital Gains Account Scheme but does not utilise the amount deposited for the purchase or construction of a residential house within the specified period, the amount not so utilised shall be charged as capital gains of the year in which the period of 3 years from the date of sale of the original asset expires and it will be long-term capital gain of that previous year.