Tax Professional and in Service
1795 Points
Joined June 2009
Hi dear,
If u see the provision of section 54F clearly, u come to know that in order to claim exemption u/s 54F, u either purchase house property one year before or 2 years after the date of transfer or construct within 3 years from the date of transfer any other house property. Thus it is clearly mentioned that u can also purchase house property one year before the date of transfer as well.
Thus, u can claim the exemption u/s 54F even if the same funds has not been utilised for investment. There is one important case law in support of this.
[2010] 7 taxmann.com 30 (Hyd. - ITAT) ITAT, HYDERABAD BENCH ‘A’, HYDERABAD Muneer Khan v. ITO ITA No. 1061/Hyd/2008 August 27, 2010
Following is the brief extracts of the case ::
For claiming benefit of exemption under section 54F of Income-tax Act, it is not necessary that same funds from sale of old residential house must be used in purchasing of new residential house
-
Neither the law nor does any circular require the identity of the amount received on sale of old residential house and utilization of same for purpose of section 54F and other relevant provisions
-
Since law itself permits investment in a new property even before sale of property covered by sections 54 and 54F, the law does not contemplate the identity of the funds on sale for its investment; since money has no colour, all that is required is compliance with the conditions of investment within the specified time
U may refer to the same case and u may treat the transaction (as u provided) as exempted u/s 54F since the identity of the funds is not at all important factor while claiming exemption as far as conditions prescribed u/s 54F is satisfied.
Regards,
Manoj
CAclubindia
