Eswar Reddy S (CFO- at NHTF) (58270 Points)
28 July 2014
Tribhuvan Aditya Singh
(Student as well as Self-employed)
(3710 Points)
Replied 28 July 2014
Z
( )
(2965 Points)
Replied 29 July 2014
Exemption is available in FULL, it would be very narrow and literal interpritation of the word "invested" & "purchase" if you take that amount should actually be paid
There are few case laws on this
Purchase can be on cash basis or on credit basis
CIT v. T.N. Aravinda Reddy [1979] 123 Taxman 290/120 ITR 46 (SC)
The word ‘purchase’ in section 54 must be interpreted in its ordinary meaning, as buying for a price or equivalent of price by payment in kind or adjustment towards an old debt or for other monetary consideration. There is no stress in the section on ‘cash and carry’.
Ishar Singh Chawla vs. Deputy Commissioner of Income-tax [2010] 130 TTJ 108(MUM.)(UO) wherein it was held that” nowhere it has been mentioned in section 54 that same funds must be utilized for purchase of another residential house. requirement of law is that, assessee should purchase residential house within specified period and source of funds is quite irrelevant"
There are other judgements also
Kumar
(1)
(58 Points)
Replied 29 July 2014
Dear Eswar,
Exemption cannot be availed if the house is purchased by taking loan.
Since it is partly paid by cheque and balance on loan, exemption can be taken on proportionate basis.
Please refer the attached case law on the same.
CAclubindia
