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Capital gains u/s. 54f & 54

Romil (CA Final Student) (51 Points)

11 January 2013

A flat is sold in the current year within 3 years of its purchase.
While purchasing the said flat exemption u/s. 54F was claimed.
Since it is transferred within 3 years the Capital Gains exempted in the earlier will be chargeable as 'Long Term Capital Gains' of the current year.
A new Residential Flat has been purchased in the current year.
Can the said Long Term Capital gains be claimed exempt u/s. 54 in respect of this residential flat?
Please provide case laws, if possible.

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3 Replies

praveen (Chartered Accountant) (6971 Points)
Replied 11 January 2013

I think you can claim it. Though I dont have a case law.

As per Section 54F capital gain will be deemed to be in the year the new asset is transferred.

As per Section 54 Capital gains exemption can be claimed on transfer of a residential property and the proceeds are utilised to buy a property.

and i feel the intention of the law is that a person should be allowed have one residential property, even if he sells he must be allowed to buy another property without any payment of tax.

This case is worth taking a chance