Income tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 October 2012 My client started construction of house March 2011 and house was completed in june of 2012. He invested by withdrawing FD's , Taking Hsg loan from bank, loan from Mother in law in cash. He sold an apartment he owned in May 2012. He wants to claim exemption u/s 54. Can he take the amount he used to repay i) the hsg loan taken,ii) loan from Mother in law which he paid subsequently on sale of Apartemnt and iii)amount he already invested from other savings, for claiming the exemption u/s 54?.( although they do not flow from the sale proceeds of apartment directly) Kindly advise.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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13 October 2012 1. Exemption u/s 54 can be availed if a residential house property is sold and another residential house property is purchased.

2. So to avail the exemption, he will have to invest the sale proceeds in another residential house property. If he uses tha amount for repayment of loan, etc he is NOT eligible to claim exemption.

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