Capital gain section 54f

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2015 Mr. A sold a residential house property which was a long term capital asset.
He started constructing another residential house property before transferring the existing one. The construction was completed within 3 years of date of transfer.
Can the construction start before transferring the house?
Is there any default on the part of Mr. A?
Is there any revocation of exemption provided in subsequent years?
Is there any case law reference

Amol S Joglekar

Amol S Joglekar (Expert)
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05 December 2015 01. The construction can start before the transfer of capital asset
02. There is no fault on the part of assessee so long as the assessee is able to prove that the capital gain is invested in the construction.
03. Revocation of exemption is applicable if the newly constructed asset is sold within a period of 3 years.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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05 December 2015 1.Construction should not start before sale.

2. Mr. A defaulted in complying section 54 ie., construction preceded sales.

PS:- 54F is not for claiming deduction on account of sale of residential property.

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