Capital Gains - Regarding Transfer of Asset

This query is : Resolved

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This discussion explores capital gains tax exemptions concerning asset transfers and property purchases. It questions whether receiving sale instalments before paying for a new property, despite later registration, qualifies as 'part performance'. It also asks if buying two units in the same building can be treated as a single residential house for exemption purposes and if remaining capital gains can be invested in Section 54EC bonds.

Amshumali Sharman

Amshumali Sharman (Querist)
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25 July 2025 In a case involving exemption under Sections 54 and 54EC of the Income Tax Act, the first instalment for the sale of the original asset was received before the first instalment was paid towards the new residential property. However, the registration of the new property was completed before the registration of the sale.

1. Can this sequence be considered as "part performance" under Section 2(47)?
2. Additionally, if there is another unit in the same apartment building (e.g., the floor above the purchased unit) being bought simultaneously, can both be treated as a single residential house for the purpose of Section 54? (Ref: K.G. Rukminiamma v. ITO)
3. If yes, and there is still a balance capital gain, can the remaining amount be invested in Section 54EC bonds for further exemption?

Would appreciate expert insights on the above.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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25 July 2025 1. No such doctrine. The rule is to purchase HP within specified time limit.
2. Better to purchase adjoining flat or on same floor for better compliance. If ITO reject the claim, need to prepare for further appeal.
3. Yes, within six months as per rule.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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25 September 2025 Good luck...

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