Capital gains (Income Tax)

This query is : Resolved

Author : Anonymous

( Author )
29 June 2012

Request you all to please respond to the following query related to section 54 & 54F of Income Tax Act, 1961 regarding exemptions from capital gains.

Mr. A sold his house and land
Now he purchase a new house out of the sale proceeds.

As per section 54, exemption is available if assessee invest the sale proceeds in residential house after selling residential house only.

And as per section 54F, exemption is available if assessee invest the sale proceeds in residential house after selling any long term asset except residential house.

Now my query is, if Mr. A bought one resdential house out of the sale prceeds from selling both residential house as well as land. CAN Mr. A avail the exemption of both sections in respect of only one new residential house.

that means

under section 54 - House No. 1 (New One) - against the sale proceeds of old house

under section 54F - House No. 1 (New One) - against the sale proceeds of land

"Can exemption under section 54 & 54F be avail in respect of one new house only?"

reply with appropriate case law if possible
Land includes watchmans shelter

Thanks

Please respond

CA CS Amit S. Kedia

( Expert )
29 June 2012

Dear Author,
If the land is attached to the building or it is apputenent to the building then you will not be entitled to exemption u/s 54F

Author : Anonymous

( Author )
29 June 2012

land includes watchmans shelter

CA CS Amit S. Kedia

( Expert )
29 June 2012

But is the land independent of building??

Author : Anonymous

( Author )
29 June 2012

consists of watchmans room admeasuring 200 sq feet

CA CS Amit S. Kedia

( Expert )
29 June 2012

If the watchman room is also sold withing the meanig of buiding then exemoption u/s 54F not available.

Amol S. Joglekar.

( Expert )
29 June 2012

Dear Anonymous, please try to undersatnd the practical situation. It is really very hard to believe that 2 transactions are separate. Only a person having VINDICTIVE purpose may like to purchase the 200 sq ft shelter w/o land. Please clarify the real story behind the curtain.