Section 54f related

Tax queries 475 views 4 replies

anita

trainee

514 Points Posted on 05 June 2015

Hello 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

Replies (4)

CA Salman Ansari

Salman Ansari & Assoc.

247 Points Posted on 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

13117 Points Posted on 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

35 Points Posted on 05 June 2015

As recently decided by s.c. in a case the purpose of sec54f is to increase investment in property therefore date on which payment for property made shall be considered to be the date of purchase for sec54 and 54 f...