Capital Gain

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Ramesh Chandra Pusola (Querist)
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02 January 2010 Dear Experts,
Please reply my query:
One of our client had sold his office permises in the month of June 2008. He had deposited whole sale consideration received from sale of Office premises in the Capital Gain A/c in the month of Dec. 2008 and April 2009 that is before submitting his income tax return for the asst. year 2009-10. Total sale consideration received were deposited in the capital gain account.

Now he want to purchase a residential house in his name. Till date he does not own residential house in his name. The house in which he is staying is in his wife`s name.

The house which he is going to purhcase is under construction and builder will give possission only after three and half years.

My query are as follows :
What will be the capital gain treatement under following two condition :

1) Full sale consideration is paid aganist the purhcase agreement of new residential house. e.g

Purchase agreement of Rs. 20 Lac
Amt paid Rs. 20 lac including Rs. 12 lac as a sale consideration received.

2) Part payment made aganist purhcase agreement for purchase of new residential house e.g.

Purhcase agreement : Rs. 20 Lac
Amt paid Rs. 6 lac only.

Please note that the possission of residential house in both the case will be received after three years from the received of sale consideration.

Please resolve the query for claiming the capital gain benefit . Please reply on the above as urgently as possible.
Thanking you,
With best regards
Ramesh Chandra Pusola

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 January 2010 54 F is the related section. If the conditions mentioned in the section are completely fulfilled, the answer to the query would appear as follows.
1)Full exemption u/s 54 F is available.
2)To avail full exemption u/s 54F, Rs.6 lakhs more has to be paid to the builder with in the stipulated time. Otherwise exemption will be limited as per section 54F(1)(b).
Regarding the 3 years duration, assessee need not complete the construction of the house and occupy the same within the specified period and it is enough if the assessee establishes that he had invested the entire consideration within the stipulated period vide decision in CIT Vs. Sardarmal Kothari (2008) 302 ITR 286 (Mad).

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