Query regarding exemption u/s 54 of the income tax act

Tax queries 245 views 3 replies

Rahul Shelke

Salaried Employee

76 Points Joined June 2008

Dear All,

Could you please guide me with reference to exemption u/s 54 in the belwo mwntoned case:

My parents have recently sold a plot with a residential house constructed on it in Ranchi (Jharkhand), the details are as folllows:
-Date of purchase of plot: May 2, 2003
-Purchase amount : Rs 2,25,000/-
-Cost of construction of house property: Rs 4,00,000
-Date of selling : June 2, 2015
-Selling amount : Rs 17,50,000 (plus some amount which is not mentioned in the registered document but was deposited in the bank account)

I have recently purchased a flat in Pune which is still under construction. The agreement to sale was registered in my name. Is it possible to claim the exemption u/s 54 if I can add my parents give the capital gain amount in cheque to the builder with a declaration that they are eventually going to stay there and its their contribution towards the property thereby claiming exemption?

Can They claim exemption u/s 54 EC, but the timeline of 6 months has already over. Can we staill claim the exemption if we invested in bonds before filing return of income.

Is there any alternative solution?

Thanks a ton for your help with this!!

Warm regards,

- Rahul

Replies (3)

Guest

hello rahul,

you didn't mentioned when the house was constructed i.e., year of construction.

it is assumed that year of construction is 2005 as it is useful for computing cost inflation index

than capital gain will be computed as follows:

sale value=1750000-225000*1081/463-400000*1081/497=350000(approx.) will be capital gain.

you cannot claim exemption under sec54EC because the time of 6 months had been expired.

you can invest the capital gain in purchase of residential house within 1 year before or 2 years after or for construction within 3 years after date of transfer.if you can't invest money before date of filling of return you can deposit in capital gain account scheme.you are saying the agreement to sale was registered in your name but investment is made by your father actually there is no provision that the asset should be purchased in the name of seller but investment is to be made by seller.judgements regarding purchase on spouse name given by court also says investment is the main objective and if it is not the stranger what is the problem, but in that case entire investment is made by husband only. actually you are a legal heir,but income tax officer may object this,you may have to visit tribunal so it is better to purchase residential house in the name of your father.so if you want to claim exemption under 54 on house property purchased under your name it is better to take expert advice.