Long term capital gain - loan repayment of new property

Abhijit (Student CA IPC / IPCC) (24 Points)

06 July 2015  

Dear Experts,

Point No 1 : Our client, has purchased a new residential property in the month of April 2015.

Point No 2: He has another residential property which he was trying to sell before the purchase of new property but could not. Hence he has taken loan for the purchase of new residential property.

Now since he got the customer for old residential house he is selling the property in the month of July 2015.

There will be Long Term Capital Gain for which he wants to claim exemption under section 54: Purchase of new residential property.

He has purchased a residential property within the period " one year before or 2 years after sale / transfer of property sold "

He will be using the capital gain for repaying the loan taken for the purpose of purchase of new property.

Please advice whether this will cover under section 54? Please suggest applicable caselaws, if any.

Looking for your early reply.

Regards,

Abhijit