Capital gain

This query is : Resolved

nazneen k (Querist)
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14 January 2014 Sir I want to know that if I have sold one plot which was having long term capital gain to reduce my capital gain I purchased one residential house on my name but still amount of capital gain is coming.and I dont have any any house on my name when i sold plot or except the new house which I purchased within 1 year.sir can i now again purchas a rsiential house on my name to gt exemption from capital gain or any other way u can suggest except sec 54F

Nikhil Kaushik

Nikhil Kaushik (Expert)
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14 January 2014 it will depend on where you buy the second house...

For eg if you buy the second house in the same building where the first house was bought, then you can claim the exemption:

you may refer to the following case laws:

(i) CIT vs. D. Ananda Basappa 309 ITR 329 (Kar.)
This was a case of multiple flats in the same complex used as one unit and the exemption under section 54 was allowed. The SLP filed by the Department against this decision was rejected by the Supreme Court [ 320 ITR (St.) 19]

(ii) CIT vs. K.G. Rukminiamma 331 ITR 211 (Kar.)
In this case, there were four residential units, but all of them were in the same building acquired in pursuance of a development agreement. Held, the exemption was allowable.

(iii) CIT vs. Raman Kumar Suri 212 Taxman 411 (Bom)
In this case, the assessee purchased a duplex flat. The A.O. held that it was not one flat but two flats which have been joined into one flat. He restricted the exemption to half of the investment made. It was held that the assessee is entitled to exemption for the entire investment made.

(iv) Hon’ble Punjab and Haryana High Court in the case of Pawan Arya vs. CIT 49 DTR 123 restricted the benefit to one house since in this case, two new houses were acquired in different locations.

(v) In the case of Smt. Myrtle D’Souza vs. ITO 53 SOT 236 (Mum) the exemption was restricted to the value of one of the flats since in that case, two flats in different floors of the complex were acquired.
However, recently in Gita Duggal’s case 257 CTR 208 (Del) liberal view has been taken in respect of purchase of residential units in the same building but at different floors. It was held that section 54/54F uses the expression “a residential house” and not “a residential unit”. It was held that there is nothing in these sections which require the residential house to be constructed in a particular manner. This judgement, however, is on different factual plane. In this case, the assessee had entered into a collaboration agreement with developer. The builder was to construct three floors at his cost and first two constructed floors were to be given to the assessee in lieu of land and third floor was to be retained by the builder. The assessee had claimed that if the cost of construction was to be treated as sale price, the same should also be correspondingly taken to have been invested in the residential house namely, the two floors that the assessee was entitled to. The case of the assessee was accepted by the ITAT and the High Court.

reference

http://subashagarwal.blogspot.in/2013/07/deduction-us-54f-on-investment-in-more.html