Capital gain exemption

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Pranjal (Querist)
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25 November 2009 Sir
There is one doubt about claiming of exemption on Capital Gains.
The situation is :
I had 1 residential house and 1 shop. I have sold both and had Capital Gain say Rs. 3 lakh on house & Rs. 2 lakh on shop. I have purchased 1 residential flat of Rs. 5 lakhs. so can I claim exemption u/s 54 against capital gain on house & u/s 54F against capital gain on shop proportionately ?

chetan soni

chetan soni (Expert)
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25 November 2009 Pranjal,

As you said you have sold the house property & shop and there is a capital gain on this transaction. It is clear that you can claim the exemption u/s 54 the capital gains arise on sale of residential unit u/s 54.

Just a question on capital gains on shop. As per sec. 54 residential unit means "the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset)". The definition of property u/s 22 means "any buildings18 or lands appurtenant18 thereto of which the assessee is the owner18, other than such portions of such property as he may occupy18 for the purposes of any business or profession carried on by him the profits".

If the shop has been used by you to do any business or profession at the time of sale of the shop then this will be considered as your business asset & not house property. If the same was given on rent to any person for any purpose or is vacant at the time of sale of shop then this will be a part of house property.
And you can claim the capital gains exemption u/s 54 on gains arise from sale f shop.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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25 November 2009 Subject to other conditions contained in the referred respective sections u can avail exemption under sections 54 and 54F for the referred deal.