Capital gains

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CA Shubham Jain (Querist)

29 May 2015 Please help me with this query:

An assessee sold a Residential Plot in February 2011 and a Residential Flat in April 2011 (having these two properties only).

The assessee invested the required amount (sale proceeds and capital gain) as per section 54F and 54, respectively, to save tax on capital gain, in construction of a flat in April 2011.

The assessee wishes to use the sale proceeds from the sale of the residential plot as per section 54F, against the construction of the flat (New House).

Questions:

1.Can the assessee also save Long Term Capital Gain (LTCG) from the sale of Residential Flat (April 2011) against such construction?

2.Will investment in the construction of flat in April 2011, be considered as investment in New House under section 54 for that purpose?

Email: sjain2017@gmail.com

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)

29 May 2015 From the facts narrated in your query you are not eligible for exemption u/s 54F on the sale of plot in february 2011 since you already had a residential flat in your name which you sold in April 2011 but you can get exemption u/s 54 for investment made in new construction out of capital gains arising from sale of old residential flat.

CA Shubham Jain

CA Shubham Jain (Querist)

29 May 2015 CS Abhishek Sir, as per para 71.5 for section 54F of Income Tax Act 1961-

"The assessee should not own on the date of transfer of the original asset more than one residential house, other than the New House."

Hence in the given case, assessee owns only one residential house (Flat) on the date of transfer of original asset (plot).

Amol S Joglekar

Amol S Joglekar (Expert)

29 May 2015 be careful regarding the DATES.

As rightly pointed out by CA Abhishek Goyal and you (Shubham) the assessee need not own on the date of transfer of the original asset (i.e. plot...i.e. feb 2011) more than one residential house.

If your assessee is construting house after apr 2011... it can qualify for 54F as well as 54.

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