20 January 2020
Dear Sir/ Ma'am The query involves using of section 54F to claim exemption.
On the date of transfer of a plot, the assessee owns two residential houses. No income from house property is being earned from both the houses. As per my understanding of the section, the assessee can claim the exemption from paying LTCG by investing the same in buying a new residential house, if the assessee own more than one residential house but there is no income from the houses that can be charged under income from house property.
As per 54F, the LTCG on long term capital asset is not chargeable provided that nothing contained in this sub-section (1) of 54F shall apply where— (a) the assessee,— (i) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD "INCOME FROM HOUSE PROPERTY".
As per my understanding, both the conditions have to be satisfied for the LTCG to become chargeable. In the case discussed above, although the number of residential houses owned exceeds 1, but there is no income that can be charged under house property.
Kindly help me out with the same. Thanks and regardsCA Anamika
21 January 2020
It is AND kind of condition. In your case, since there is no income from the house property ( may be vacant or otherwise), you need to follow section 23(4). And by virtue of this section, your house property income is chargeable
In section 54F, the wordings viz.,the income.......... is chargeable under the head IFHP is used in clause (b) to the proviso of the section. This condition is applicable only to the new house mentioned in clause (a)(iii) and not to the ORIGINAL ASSET (here the existing two residential houses).
In other words, the view of Seethraman Ji is correct.
CAclubindia
