Exemption u/s 54 e of the act

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2013
My client has disposed a land in
March,2013 for a sale consideration of
Rs.7 lakhs and the Long Term capital
gains arising out of this transaction
amounts to Rs.5 lakhs.He did not own any
house property in his name.
In April,2013,he entered into an
agreement with a proposed vendor of a
house building and paid an agreed price
of Rs.6 lakhs.He took possession of the
said property and is being enjoyed.
The said house building was
registered only in the first week of
October,2013,say,after the due date of
filing his Return of Income.(July,2013)
Can the assessee claim an exemption
of long term capital gains u/s 54E of the
Act for the asst.year 2013-2014?. Can he
take the advantage of 'TRANSFER" within
the meaning of Section 2(47)(V) read with
Explanation 2 of the Act and claim
exemption? since there is a delay in
registration.Please clarify.

CA Mohit Bansal

CA Mohit Bansal (Expert)
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22 October 2013 First of all, this exemption is to be claimed u/s 54F and not u/s 54E. Yes, you are eligible for exemption u/s 54F, though you are not a registered owner of the same but a beneficial owner. Hence you can avail exemption proportionate to the amount invested i.e. 6/7*5= 4.29 lakhs(approx)

Nikhil Kaushik

Nikhil Kaushik (Expert)
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22 October 2013 Section 54E doesn't apply to your case. At best you can seek cover under 54F. However, in order to claim complete exemption under 54F, you are required to invest the whole of consideration (Rs 7 lakhs).

In your case, Rs 71 thousand shall still remain taxable. (5 lakh * 6 lakhs/ 7 lakhs)

Since you already paid Rs 6 lakhs in April 2013, no dis-allowance is warranted in this case. The requirement for investment of the proceeds. registration of documents on a later date should not cause any problem.

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