Exemption u/s 54F?

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Aditya Maheshwari (Querist)

21 June 2011 Is exemption u/s 54F available on sale of unlisted shares by an individual assessee where he is already having one residential premises and one tenented premises (there in books of account) and for the purpose of exemption he is purchasing one more house property u/s 54F.

That is to say if the assessee at the time of sale of shares is having one residential premises and one tenented premises and not purchasing one more property to claim exmeption u/s 54F whether exemption available as the requirement of 54F is that the assessee should not own more than one residential house, other than the new asset, on the date of transfer of the original asset.

So whether tenancy rights tantamount to own residential property for the purpose of section 54F. Also if there is any legal backing for the same then kindly let me know.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

21 June 2011 Tenancy right can not be termed as ownership right. Under Section 54F, ownership right only, is being considered.

You can avail the exemption.

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Aditya Maheshwari

Aditya Maheshwari (Querist)

22 June 2011 Thanks you for your reply but do u have any case laws in support?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

22 June 2011 Keeping aside the capital gains on shares, I want to draw your attention back to the query in which you have described about one tenancy right property.

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Sell the tenancy right property today- for a Capital Gain of Rs 40 lacs. (CG is taxable w.e.f. 1-4-1995. For details S. 55(2)(a) may be referred.)

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In which Section exemption will be allowed to you if you purchase a "New Asset" in the form of a residential house ?
U/s 54?
or
U/s 54F... ??

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Tenancy right is a separate asset than the owned residential house.

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I could find a case law which will beautifully explain the difference-

https://www.indiankanoon.org/doc/497270/

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