Capital gain deduction

This query is : Resolved

CA Tejas Andharia (Querist)
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30 July 2011 Suppose Mr. XYZ has sold his residential house in FY 2010-11 and he wants to claim deduction u/s. 54. Due date for filing return in this case is 31/07/2011. upto 31/07/2011, he has neither purchased another residential house nor deposited the amount equal to capital gain in special capital gain bank account with nationalised bank. But He has advanced money to the seller of residential house upon entering into agreement to sale (Registrar related formalities are yet to be completed on payment of remaining amount).
Can we claim deduction u/s. 54 in such case?

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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30 July 2011 In income tax also definition of transfer says that if possession of property has been taken in a part performance of a contract can be treated as a transfer.

So in my view you can take the deduction u/s 54.

CA Tejas Andharia

CA Tejas Andharia (Querist)
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01 August 2011 Thanks you very much. I need one more opinion (another expert) please.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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11 August 2011 Q-........But He has advanced money to the seller of residential house upon entering into agreement to sale (Registrar related formalities are yet to be completed on payment of remaining amount).

The compliance required is to purchase a house and utilisation of the amount of capital gain. Purchases an possession are 2 different things. Purchase is an action before the possession. He will be eligible to claim deduction U/s 54.

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