Gift of residential property on which LTCG exemption was claimed under Section 54F

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A father claimed a capital gains tax exemption under Section 54F by reinvesting sale proceeds into a new flat. He wishes to gift this flat to his son before the mandatory three-year holding period. While gifting is possible, the capital gains tax exemption claimed by the father will be reversed if the property is sold by the son within three years of the original purchase. This is based on Income Tax Appellate Tribunal rulings.

Mohan Krishna S

Mohan Krishna S (Querist)

26 September 2024 My father sold a land property on his name and purchased a flat on his name with entire sale consideration.
Now, Section 54F says he should not sell it within three years
But can he gift the flat through gift deed in my name or should we wait for three years for gift transaction also?
References of relevant cases will help a lot. Thanks.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

26 September 2024 Yes, he can gift it to you, but you will have to wait for 3 years for the sell, otherwise exemption claimed by your father will get reversed.
Reference: Income Tax Appellate Tribunal - Chennai
Abdul Hameed Khan Mohammed, Chennai vs Department Of Income Tax; ITA Nos.1782/Mds./2015

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

11 October 2024 Good luck ....

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