Capital gain on Sale of House

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Ashish Jain (Querist)
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26 February 2009 whether exemption can be availed in follwing case:

A person has house of ground floor only Later of which he sell ground floor and reconstruct on it two floors for his residence.
Can he avail exemption

chetan soni

chetan soni (Expert)
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26 February 2009 Situation to be called as Development of the Land. Firstly he sold the land that means it amounts to transfer of property. So provisions of capital gains attracted. Now he constructed the flat so he can claim the cost of construction as exemption u/s 54 against capital gains.

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Ashish Jain

Ashish Jain (Querist)
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26 February 2009 Sir,

But there the words used are construction of new house, doest tht new floors can b construed as new house

K V Subba Rao

K V Subba Rao (Expert)
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26 February 2009 If a person buys an Apartment, Property discription in Sale Deed includes undivided share of land also. This is obviously because, it is not possible to construct any superstructure except over land only.

On the same analogy, solution given by Sri Chetan appears to be logical and practical too