Can a person repay house loan out of proceeds u/s 54 f ???

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pooja kaushik (Querist)
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25 February 2014 If a person sold capital asset other than Residential House Property , and invests half of the proceeds to repay his house loan and half to purchase residential house ,then can he claim exemption of the amount invested to repay house loan ???

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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25 February 2014 Amount of housing loan repaid will not be counted as investment u/s 54F.

pooja kaushik

pooja kaushik (Querist)
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25 February 2014 Sir can you pls explain why? as far as I know, any housing loan taken within 1 year before the sale of property is eligible for exemption u/s-54F. Pls. correct me if i am wrong.

The prime question was-if commercial property is sold for Rs.1Lac & Rs.70K in used to purchase a new HP & 30K is used to repay the loan of one & only other existing HP (loan taken within 1 year of sale of commercial property), whether the entire consideration of 1Lac exempt u/s-54F. If not, why?

Thanks in advance!

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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25 February 2014 First para is correct.

30k in second para is utilized to pay off the liability created to enjoy the benefit availed through 1st para. It is duplication / application of fund to discharge a liability.