Exemption under section 54

Page no : 2

Prabhaw Agarwalla (Article Assitant) (66 Points)
Replied 28 April 2015

What I feel is you can claim the deduction because act says you can buy a new house one year before selling your old house and it doesnt specify method of purchase of new house

So I feel you can avail the deduction

CA Parth Rajendra Almaula (Chartered Accountant) (85 Points)
Replied 28 April 2015

Dear Giridhar,

Do you agree with the view of Prabhaw Agarwalla...!!!

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 28 April 2015

Yes. It is as per the law.

One year before the sale of house or within two years from the date of trasnfer and in case of under construction property within 3 years from date of transfer.

CA Parth Rajendra Almaula (Chartered Accountant) (85 Points)
Replied 28 April 2015

Dear Giridhar,

Thats what i am asking na...!!! I have purchased the residential property which i have purchased in January 2015 by making 100% payment to builder by availing housing loan. Now in this month, I have sold my flat and the amount of the sales consideration will be received by me in upcoming month.

So when i will receive this amount, is there any nexus that i have to utilize this amount in to purchase of new residential property...??? I have already make payment towards purchase of new residential property...!!!

Hope you are clear with my query this time...

Thanks

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 28 April 2015

The act nowhere states that the same sale proceeds that you dervied from teh sale of house are to be utilized in purchsae of new residential property in order to avail exemption u/s 54/54F.

It only states that a residential property needs to purchased one year before the sale took place or within 2 years from the date of trasnfer in order to avail exemption from the capital gains tax

So in your case you have purchased the house property and sold the same during the same month. So I think that first you need to analyse the date of purchase of new house whihc shud be one year before the date of sale of the other house. Else the taxing authorities would levy tax on the capital gains.

Also refer teh below link in whihc various case laws have been given on the substance of section 54

https://www.bcasonline.org/articles/artin.asp?1016

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