anita (trainee) (514 Points)
05 June 2015Hello experts,
As per section 54F : Exemtion will be avaliable to an indl/huf if the sale consideration is
- Invested in purchase of residential house within 1 year before or 2 years after such transfer.
- Construction of house within 3 years of such transfer.
What date will be taken into reckoning for "purchase"?
Will it be the date of registry or the date when possession is taken from builder on the basis of a tri party agreement?
Please guide
CA Salman Ansari
(Salman Ansari & Assoc.)
(247 Points)
Replied 05 June 2015
Hello Anita,
With respect to all sections regarding Capital Gain in general, and provisions of Sec. 54-54F in particular, the date of purchase is considered to be the date when the assessee acquires a right in the property in question. Hence, the date of registery shall be the date of purchase for the purpose of Section 54F.
However, in the case of allotment of under-construction flats, the letter of allotment is what vests the right to property in favour of the assesse, and therefore, the date of letter of allotment shall be the date of purchase. as decided in CIT v. Ved Parkash and Sons (HUF) (1994) 207 ITR 148.
Hope this was of help.
CMA Poornima Madhava
(CMA)
(13112 Points)
Replied 05 June 2015
Holding of legal title is not necessary. If the taxpayer pays full consideration or substantial portion of it (in terms of purchase agreement) within the period prescribed (even if the possession is handed over after the stipulated period or the sale deed is registered later on), the exemption u/s 54F is available.
mr laxmikant gupta
(Ca)
(35 Points)
Replied 05 June 2015
Rinkle Mahajan
(Audit Executive)
(25 Points)
Replied 08 June 2015
Agreed with the comments of poornima.
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