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Section 54 of Income Tax Act

Prateek Nagpal (STUDENT) (52 Points)

09 December 2010

The assessee has three house properties. One of the house property has been sold by the assessee during current financial year resulting in long term capital gains. The assessee is willing to invest the capital gains in another house property.

Whether the assessee is eligible to claim deduction u/s 54 of the Income Tax Act 1961 keeping in mind that the assessee has already two house property

Thanks with regards

Prateek Nagpal

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19 Replies

madhur gupta (student/article ) (1022 Points)
Replied 09 December 2010

Sec 54 nowhere put any condition on number of houses owned

this condition is only in sec54F not in sec54

so in present case assesse is eligible to get deduction.

1 Like

Sunali (Learner) (1317 Points)
Replied 09 December 2010

Agree with Madhur..

Raghunath Prasad (WORKING) (385 Points)
Replied 09 December 2010

Originally posted by : madhur gupta
	Sec 54 nowhere put any condition on number of houses owned this condition is only in sec54F not in sec54 so in present case assesse is eligible to get deduction.

agree with madhur there is no limit of house property in u/s 54

CA Chirag Haraniya (Chartered Accountant) (902 Points)
Replied 09 December 2010

Originally posted by : madhur gupta
	Sec 54 nowhere put any condition on number of houses owned this condition is only in sec54F not in sec54 so in present case assesse is eligible to get deduction.

Max Payne (employed) (2569 Points)
Replied 09 December 2010

Originally posted by : Prateek Nagpal
	The assessee has three house properties. One of the house property has been sold by the assessee during current financial year resulting in long term capital gains. The assessee is willing to invest the capital gains in another house property. Whether the assessee is eligible to claim deduction u/s 54 of the Income Tax Act 1961 keeping in mind that the assessee has already two house property Thanks with regards Prateek Nagpal

Prima facie, yes.

You can claim section 54 benefit....

Pls ensure that the assesee used the house for residential purpose and not for running his business or carrying on profession.

Also to ensure that the property was assessed as income from House property (self occupied or otherwise) in the hands of assessee and not as AOP under section 26.

CA Saba Naaz (Chartered Accountant) (8487 Points)
Replied 09 December 2010

Originally posted by : madhur gupta
	Sec 54 nowhere put any condition on number of houses owned this condition is only in sec54F not in sec54 so in present case assesse is eligible to get deduction.

agree with this.

3 Like

gaurav salhotra (article) (33 Points)
Replied 10 December 2010

I wud further like to add to the question.

Under sec 54, will exemption be available for all the residential properties if we purchase or construct more than one residential property within the time limits specified in the section or the section entitles us to exemption only for one residential property ?

Max Payne (employed) (2569 Points)
Replied 10 December 2010

Originally posted by : gaurav salhotra
	I wud further like to add to the question. Under sec 54, will exemption be available for all the residential properties if we purchase or construct more than one residential property within the time limits specified in the section or the section entitles us to exemption only for one residential property ?

Strict view is not to claim such exemptions.

Liberal view can be taken... that the reinvestment need not be in one house property.

The benefit of investing the CG in two houses was allowed in Ananda Basappa's case (Kar, 2009)...

B. Umapathy (student) (405 Points)
Replied 10 December 2010

ya can claim exemption u/s 54. For Gaurav question, i think so, yes.

Raju (Meger, Aquisi,Takeover) (Audit Assitant) (56 Points)
Replied 10 December 2010

As per section 54 of income tax act 1961you will have to sale the residence house and we can purchase only residence house it doesn't matter that how much house property you have. and long term capital should be arise.

Quantam of Exemption : amount of capital gain which you will invested in the new residence house by selling the old one with in two year after the date of transfer or year befor the transfer or if in contsruction with in three years from transfer

if the amount of caiptal gain is less than or equal to the cost of new house than entire capital gain is exempt

if the amount of capital gain is greater than cost of new house than the whole

amount of investment in new house is allowed as exmpt

Conclusion it doesn't matter in section 54 because there is no any clause regarding

the no. of hose property you hold

it is mention in the section 54F that you should not own more than one rsidence

house at the time of transfer

so that you avail the exemtion under section 54

MUKUL (ARTICLE ASSISTANT) (23 Points)
Replied 11 December 2010

ya u/s 54 there is no condition alike to sec 54f so he can claim exemption even though he has more than one house property

Ramandeep singh (CA-final,M.com (Final)) (59 Points)
Replied 12 December 2010

yes, he will eligiable for exemption u/s 54 because there is a limit of more than one house is in the 54(f) not in 54 so,it is eligiable

Bharat Khurana (Student) (153 Points)
Replied 13 December 2010

there is not any restriction regarding the number of house property that should be owned by the assessee for claiming deduction u/s 54. So if he purchases or construct the house in circumstances as specified u/s54 he shall be eligible for exemption u/s 54.