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Can deduction u/s sec 54 and 54f be taken simultaneously

07 July 2012

My client sold house property in F/Y-2009-10 in Rs-10 lakhs and reinvested same amount in house property Rs-50 lakhs benefit of section 54 has taken and in next year other land is sold for sales consideration Rs-50 lakhs assesse want to take benefit U/S 54F of from last year's excess investment Rs-40Lakhs.

Please provide solutions with relevant case law and supporting.

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10 Replies

Ankush sharma (Auditor Article Assistant) (816 Points)
Replied 07 July 2012

Yes, Assessee can claim exemption of sec54 in 2009-10 and sec 54f in 2010-10

There is nothing in the Act that prohibits claim under section 54 & 54F simultaneously, there is no bar if assessee fulfils both of the conditions of sec 54f

Assuming that asset sold is long term also new house in 2010-11 is purchased within 1 year of purchase of pervious house in 2009-10

2009-10

sale consideration 10,00,000

less ICOA nil

LTCG 10,00,000

less exemption

u/s54 (10,00,000)

LTCG nil

2010-11

sale consideration 50,00,000

less ICOA nil

LTCG 50,00,000

less exemption (40,00,000)

u/s54F

50,00,000/50,00,000*40,00,000

LTCG 10,00,000

Please correct me if i am wrong

CA.Anupriya Agarwal (Practising CA) (110 Points)
Replied 07 July 2012

For Sec 54F Eligible Assets sold should be Any long term asset (other  than  a residential  house  property ) provided on the date of transfer the taxpayer does not own more than one residential house property from  the assessment year 2001-02 (except the new house)

In the above case, assess has already purchased the 'house property' before selling 50 lakh property. so i doubt whether this cn b applied.

and as per my knowledge Sec 54 and 54F can be applied in same FY not in simultaneous years.

So House Property is residential or not should be checked.

Ankush sharma (Auditor Article Assistant) (816 Points)
Replied 07 July 2012

Originally posted by : CA.Anupriya Agarwal
	For Sec 54F Eligible Assets sold should be Any long term asset (other than a residential house property ) provided on the date of transfer the taxpayer does not own more than one residential house property from the assessment year 2001-02 (except the new house) In the above case, assess has already purchased the 'house property' before selling 50 lakh property. so i doubt whether this cn b applied. and as per my knowledge Sec 54 and 54F can be applied in same FY not in simultaneous years. So House Property is residential or not should be checked.

But anupriya thats the issue it is assumed that new house is purchased within 1 year of purchase of old house

can we treat it same as sec54 and sec54ec

can you provide any ruling with your answer

CA.Anupriya Agarwal (Practising CA) (110 Points)
Replied 07 July 2012

i dnt ve any rulings for my answer.

assumptions cn b done on anything.

still i think it cannot b taken..

Ankush sharma (Auditor Article Assistant) (816 Points)
Replied 07 July 2012

ok i wil try nd find out any ruling with these 2 sec

Ritika Pundir (CA) (154 Points)
Replied 07 July 2012

Agree with Ms. Anupriya.

Benefit under section 54 and 54F cannot be claimed simultaneously. Proceeds are from sale of land, but the assesse is already in possesion of a residential house property from the 1st investment (claimed u/s 54).

But they cannot be applied in the same FY either. As per the provisions of the act, if he holds a residential house property currently, benefit u/s section 54F cannot be claimed. If he claims 54F and then purchases the residential house property, benefit under the section stands withdrawn & subject to LTCG.

Kindly correct if wrong.

SAMEER SHAHJI (Assistant Tax Manager) (83 Points)
Replied 15 September 2012

Exemption u/s 54 & 54F can be taken together for a single property otherwise not.

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 16 September 2012

suo moto purpose of claiming the both benefits can be attained provided the money (capital gain) us utilized towards the acquire of the new property (one yr prior to) ,,,,,,..............so if you have acuired the property in past year but the payment is due and would be paid with the money received from the sale of property B, then you can avail

if the money is not used in that property in question, then no exemption. the motto is to use the money in new property, not to allow exemption by book entry.

SAMEER SHAHJI (Assistant Tax Manager) (83 Points)
Replied 17 September 2012

Originally posted by : U S Sharma
	suo moto purpose of claiming the both benefits can be attained provided the money (capital gain) us utilized towards the acquire of the new property (one yr prior to) ,,,,,,..............so if you have acuired the property in past year but the payment is due and would be paid with the money received from the sale of property B, then you can avail if the money is not used in that property in question, then no exemption. the motto is to use the money in new property, not to allow exemption by book entry.