Query on Capital Gains Section 54 & Section 54F

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This query is : Resolved

Nishi Chhajed (Querist)

02 February 2009 A has sold his residential house and earned capital gains of Rs 50Lacs. He has been able to identify 2 Flats, one at Mumbai and the other at Pune, so that his entire capital gains can get exempted u/s 54. However his CA is of the view that investment in two properties may jeopardize his claim u/s 54F.
Mr A seek your advise.
If instead of capital gains arising out of the sale of residential house, the capital gains arising due to the sale of urban land and the claim is made u/s 54F, would the position be different.

srinivasan pooranalingam

srinivasan pooranalingam (Expert)

02 February 2009 In my opinion, for claiming exemption u/s. 54 of the IT Act, 1961, the capital gain amount should be invested in purchase of a residential house. However, to claim u/s. 54F, the net sale consideration should be re-invested in a house property. Only one house is permissible at a time. But, one favourable view is the assessee can re-invest the capital gains to claim exemption u/s. 54 in two flats, if both are situated adjacently in the same apartment.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

08 February 2009 For Sec.54 there is not limit as to number of residential properties and amount to be invested is capital gains amount whereas in case of 54-F amount to be invested is sales consideration otherwise there will be deduction will restrited to amount of sales consideration invested.

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