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Naveen Kumar Jain (Querist)
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30 March 2012 A owns a residential house in Mumbai purchased in June 2010. It was partly financed by a Bank Loan. She received by way of gift from her father 1/3rd share in another house at Delhi in August 2011.
The Delhi house is being sold in April 2012.
The outstanding loan to bank against Mumbai property is proposed to be paid out of proceeds of sale of Delhi house.
My queries are:
1. Can repayment of bank loan be covered under sec 54 as utilisation of capital gain on Delhi property as acquisition of house within 1 year prior to sale?
2. By what date can she deposit the gain amount in capital gain scheme - 31 July2013 or 31 March 2015 as extended date permitted for filing return for assessment year 2013-14? Pl refer judgement of the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Miss Jagriti
3. If she sells Mumbai property in July 2013 and invests the total of capital gain arising out of sale of both properties in buying one house in Aug 2013, can she get benefit of sec 54 for both capital gains?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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30 March 2012 1. No because
a)investment in Mumbai property is already over with own funds along with borrowed funds.
b)loan repayment can't be equated as deemed investment in an existing house on which investment is over as in (a) above.
c) absolute ownership is not warranted for 54,therefore, repayment will be ignored since virtual ownership is satisfied.
2. 31st July 2013. Cited decision need reconsideration since it is against law which is very clear.
3. Yes provided reinvestment should be routed through Capital gains account scheme,1988 presuming that due date as per 139(1) is 31/07/2013.

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