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Long Term Capital Gain

Shruti Bhatia (PCC Inter) (54 Points)

02 March 2010

Mr A being senior citizen sells his old house perchased in 1981, and makes a long term cap gain, if he invests the said long term gain amount in new house and his name stands second with his sons name first will he be entitled to LTG exemption for fy: 2009-10

2) If mr A invests 50 % of the LTCG amount in new house as second holder along with his son as first owner and invests bal 50% in second new house along with his second son being first holder and Mr A being second holder.

Let me know If Mr A invests LTCG in new house being second holder in the flat along with his son being first holder. will he be entitled for LTG exemption u\s 54.

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3 Replies

Amir (Learner) (4016 Points)
Replied 03 March 2010

Dear Shruti,

In first case exemption u/s 54 will be available, NO problem at all, I mean it is not necessay that Mr. A should be the first owner in the new house.

In the second case, in one case it was held that where assessee has purchased 2 Houses then exemption u/s 54 can be claimed only in respect of one house. However there is contradictory judgement as well.

In short in second case Exemption will be available u/s 54 but whether in respect of 1 house or both that can't be said.

One way to avoid this situation is balance amount of gain after acquiring one property can be invested in REC/NHAI Bonds to the extent of Rs. 50 Lacs & exemption u/s 54EC can be claimed..Keep in mind this investment is to be made within 6 months from the date of sale of house....