IS HE ELIGILBE TO DEDUCTION FORM CAPITAL GAINS TAX.
In case the asset transferred is a long term capital asset being a residential house, and if out of the capital gains, a new residential house is constructed within 3 years, or purchased 1 year before or 2 years after the date of transfer, then exemption on the LTCG is available on the amount of investment in the new asset to the extent of the capital gains. It may be noted that the amount of capital gains not appropriated towards purchase or construction of a new house within 3 years may be deposited in the Capital Gains Account Scheme of a public sector bank before the due date of filing of Income Tax Return. This amount should subsequently be used for purchase or construction of house.
When the asset transferred is a long term capital asset other than a residential house, and if out of the consideration, investment in purchase or construction of a residential house is made within the specified time as in sec. 54, then exemption from the capital gains will be available as:
1.If cost of new asset is greater than the net consideration received, the entire capital gain is exempt.
2.Otherwise, exemption = Capital Gains x Cost of new asset/ Net consideration.
It may be noted that this exemption is not available, if on the date of transfer, the assessee owns any house other than the new asset.
It may be noted that the Finance Act 2000 has provided that with effect from assessment year 2001-2002, the above exemption shall not be available if assessee owns more than one residential house, other than new asset, on the date of transfer. Investment in the Capital Gains Account Scheme may be made as in Sec.54.
THE LEGAL PROVISIONS READ LIKE BELOW :
1. UNUSED AMOUNT OF CAPITAL GAINS CAN BE DEPOSITED IN CAPITAL GAIN DEPOSIT SCHEME " BUT THE ASSESSEE HAS TO INFORM THE ITO ABOUT THAT MATTER BEFORE SUBMISSION OF RETURN OF THE F.Y. IN WHICH HE HAS MADE CAPITAL GAIN
2. IF THE AMOUNT FROM THAT DEPOSIT ACCOUNT HAS NOT UTILISED FULLY /PARTLY FOR PURCHASE OF HOUSE PROPERTY THEN AFTER 3 YEARS FROM THE DATE OF CAPITAL GAIN IT WILL BE TREATED AS LONG TERM CAPITAL GAIN .....
3.SO HERE MAIN WORD IS " FROM THE DEPOSIT ACCOUNT " THE AMOUNT SHOULD BE UTILISED .IF NOT THEN THE AMOUNT UNUTILISED IS TAXABLE .....
4. SO IN YOUR CASE , IT HAS NOT BEEN UTILISED . SO IT WILL BE TAXABLE IF 3 YEARS HAVE BEEN ELAPSED ....
HOPE THIS SOLVES YOUR QUERY ....
1) J.V. Krishna Rao v. Deputy Commissioner of Income-tax, Circle 3(3), Hyderabad
IT APPEAL NOs. 1866 & 1867 (HYD.) OF 2011
link : https://docs.google.com/open?id=1QbU15HeDBd7OoVSTQLb25HLLXeasZIUT19Fe6YuFcbL4CAbzfNQKlZ3lopGwudHzNxXfErQZBgRLj4-H
2)Muneer Khan Vs. Income-tax Officer, Ward No. 7(2), Hyderabad  41 SOT 504 (HYD.) [27-08-2010]