Regarding to applicability of exemption of 54F

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This discussion explores the applicability of Section 54F tax exemption for a property purchased in 2008 and converted into stock-in-trade in 2011-12, before being sold in 2023-24. The core question is whether the exemption period for purchasing a new residential house is calculated from the date of conversion to stock-in-trade or the date of the actual sale of that stock. The user notes that the point of taxation is typically considered the sale date, not the conversion date.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)
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15 June 2024 Suppose X purchased a plot in the year 2008 for Rs 8 Lakh and converted it into stock in trade of his business of Real Estate in the year f.y. 2011-12. Such Plot after conversion is sold in the year f.y. 2023-24. and purchase a new residential house. 54F is applicable from the date of conversion i.e. from 2011-12 or from the date of sale of stock i.e. from 2023-24?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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15 June 2024 Sec, 54F eligible over LTCG from 2008 till date of conversion i.e. 2011-12

Suresh S. Tejwani

Suresh S. Tejwani (Querist)
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15 June 2024 Section 54F i.e.,
a. The amount is invested to purchase one residential house in India. It is compulsory that such investment is made within a period of 1 year before or 2 years after the date of transfer; or

b. The amount is invested, within a period of three years, to construct one residential house in India.

is applicable from the date of conversion of capital gain in to stock in trade or from sale of stock?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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15 June 2024 In this case the point of taxation is taken as 'when the land is sold' and not 'when it was converted.' though LTCG was as said earlier.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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30 August 2024 Good luck.

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