Long Term Capital Gain exemption ON SALE OF MUTUAL FUND INVESTED IN PURCHASE OF FLAT

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This discussion explores whether Mr A can use his £50 lakh long-term capital gain from mutual funds to repay a home loan for a flat booked in 2018. The flat is under construction and expected by March 2025. While initially advised he might be eligible for exemption under Section 54F, a key point raised is that he hasn't purchased a ready flat within the specified timeframes before or after selling the asset, as the property was booked six years ago. The eligibility hinges on the interpretation of purchase dates and possession, with a shared judgment suggesting potential challenges at the assessment level.

K.G.Shah

K.G.Shah (Querist)
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05 June 2024 Mr A has booked Flat in 2018 under subvention scheme (where no EMI till possession) .

Till date out of 75 lakh he had paid only 5 lakh and for balance 70 lakh loan emi will start after possession.

Flat possession is likely to get in March 2025.

Mr A is having long term mutual fund gain about 50 lakh .

Can he sold mutual fund them and repay loan in Mar 25 and claim for income tax as long term gain invested for purchase of flat ?

Please advise

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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05 June 2024 Yes, he will be eligible, if done before getting possession.

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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05 June 2024 Hello Dhirajlal Sir,
In the apparrent case how will he fall under Sec 54F clause,

Since he has not purchased a ready flat 1 year before the sale of Asset nor he is purchasing a ready flat within 2 years after the sale of asset, as he already done purchased a under construction property 6 years Back i.e. 2018.

How will he be eligible u/s 54F

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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05 June 2024 I rely upon....
https://taxguru.in/income-tax/section-54-purchase-date-possession-flat-assessee-pays-final-consideration.html

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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05 June 2024 Ok Sir thank you sharing the judgment .

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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05 June 2024 So if in case it is taken up for assessment, it wont be allowed at lower level I guess.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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05 June 2024 We can claim at least 70 lakhs on lower side.