Can 54 F be claimed on Reconstruction and Remodelling of Kitchen

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Mr A purchased a property and is eligible for Section 54F exemption. He spent £10,00,000 on kitchen reconstruction and a new room before occupying the house. The discussion confirms that these expenses can be capitalised as the cost of improvement and are eligible for the Section 54F deduction, citing the Karnataka High Court case of Mrs. Rahana Siraj Vs. CIT.

Shweta

Shweta (Querist)
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28 March 2023 Mr A purchased the house property in FY 2022-23. The property was occupied earlier by other owner.
Mr A is eligible for exemption under section 54F for the investment in this house property.

Other than the cost of acquisition, he also spent Rs 10,00,000 as follows (after purchase but before residing in the property) –
1) Rs 7,00,000 on Reconstruction and Remodelling of Kitchen – For this purpose the kitchen was completely taken apart and then remodelled.
2) Rs 3,00,000 on construction of new room.
Can Mr A add Rs 10,00,000 spent as above to the cost of acquisition or cost of improvement and claim 54F on this amount as well.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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28 March 2023 As per act, it cannot be added for sec. 54F deduction.
Yes, it can be capitalized as cost of improvement.

Shweta

Shweta (Querist)
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28 March 2023 Thanks for your help sir

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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29 March 2023 The said Rs. 10 lakhs can be claimed u/s 54F. Citation :- Mrs. Rahana Siraj Vs. CIT (2015) 232 Taxman 327 (Kar).

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Shweta

Shweta (Querist)
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29 March 2023 Thanks so much for the reply Sir. The assessee is in Karnataka so this case of "Karnataka High Court" will be really helpful.
I really like this platform for providing solutions to Queries related to application of various Laws.

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