residentail hp acquired on loan-dedn u/s54 ?
This query is : Resolved
CA Abhishek Singh
(Querist)
10 May 2011
one of our client having only one residential hp sold it in the ay 2012-13.he has long term capital gain of Rs.20,00,000/-. he want to invest amount received in purchasing a shop.
can he claim deduction u/s.54 if he purchases a residential house property within the time limit through loan from bank and invest sale proceeds in shop.
waiting for your reply.
can he claim deduction u/s.54 if he purchases a residential house property within the time limit through loan from bank and invest sale proceeds in shop.
waiting for your reply.
CA Vijay Kumar Gupta
(Expert)
10 May 2011
Yes , He can. There is no bar under Income Tax Act,1961 that the same proceeds should be utilised in buying the new HP.
CA MANOJ GUPTA
(Expert)
10 May 2011
SECTION 54 SPECIFICALLY PROVIDES THAT THE GAIN SHALL BE INVESTED IN A RESIDETIAL HOUSE PL NOTE
CA MANOJ GUPTA
JODHPUR
09828510543
CA MANOJ GUPTA
JODHPUR
09828510543
CA Vijay Kumar Gupta
(Expert)
11 May 2011
CHANGE OF OPINION
With due respect to Sh. Manoj Gupta, Expert, I submit that my opinion is based on the judicial ruling of Hon'ble Bombay High Court in the case of CIT vs DR. P.S. Pasricha, as per itatonline.org dt.13-10-2009,where the facts are similar. If need clarification, please contact. My contact no. is 9868826026.
With due respect to Sh. Manoj Gupta, Expert, I submit that my opinion is based on the judicial ruling of Hon'ble Bombay High Court in the case of CIT vs DR. P.S. Pasricha, as per itatonline.org dt.13-10-2009,where the facts are similar. If need clarification, please contact. My contact no. is 9868826026.
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CA MANOJ GUPTA
(Expert)
11 May 2011
Dr Pasricha case is of tribunal and not of High Court as per my knowledge
the issue is full of doubt
In Mrs. Prem P. Shah v. ITO (2006) 100 ITD 61 (Mum-Trib) it was held that there is no requirement of law that same amount of sale consideration should be utilized for acquisition of property for claiming exemption under section 54 of the Act.
In Milan Sharad Ruparel v. Asstt. CIT (2009) 28 (II) ITCL 362 (Mum ‘G’-Trib) : (2009) 27 SOT 61 (Mum-Trib)THE TRIBUNAL HELD OTERWISE
In Smt. Pramila A. Parikh v. ITO (IT Appeal No. 2755 (Mum) of 1997) is also to the same effect as that in Milan Sharad Ruparel
So there is divergence in the judicial opinion
The kerala High court in ITO v. K.C. Gopalan (1999) 107 Taxman 591 (Ker)has held that in order to get benefit of section 54, there is no condition that assessee should utilize the sale consideration itself for the purpose of acquisition of new property. but in that case the assessee deposited sale consideration in a bank account
going by the language of section 54 it appears that the investment should be of capital gain realised from transfer of the residential house
CA MANOJ GUPTA
JODHPUR
09828510543
the issue is full of doubt
In Mrs. Prem P. Shah v. ITO (2006) 100 ITD 61 (Mum-Trib) it was held that there is no requirement of law that same amount of sale consideration should be utilized for acquisition of property for claiming exemption under section 54 of the Act.
In Milan Sharad Ruparel v. Asstt. CIT (2009) 28 (II) ITCL 362 (Mum ‘G’-Trib) : (2009) 27 SOT 61 (Mum-Trib)THE TRIBUNAL HELD OTERWISE
In Smt. Pramila A. Parikh v. ITO (IT Appeal No. 2755 (Mum) of 1997) is also to the same effect as that in Milan Sharad Ruparel
So there is divergence in the judicial opinion
The kerala High court in ITO v. K.C. Gopalan (1999) 107 Taxman 591 (Ker)has held that in order to get benefit of section 54, there is no condition that assessee should utilize the sale consideration itself for the purpose of acquisition of new property. but in that case the assessee deposited sale consideration in a bank account
going by the language of section 54 it appears that the investment should be of capital gain realised from transfer of the residential house
CA MANOJ GUPTA
JODHPUR
09828510543
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CA Vijay Kumar Gupta
(Expert)
11 May 2011
CHANGE OF OPINION
The Case Law referred by me is of Bombay high Court not of tribunal. still in my opinion, it is not necessary to have direct nexus of amount of sales proceeds with investment in new house.There is ample time (two /three years) to invest.
The Case Law referred by me is of Bombay high Court not of tribunal. still in my opinion, it is not necessary to have direct nexus of amount of sales proceeds with investment in new house.There is ample time (two /three years) to invest.
CA. Anuj Gupta
(Expert)
15 May 2011
I agree here with CA Vijay Kumar Gupta.
The ultimate objective of section 54 shall be met if the house is purchased from borrowed funds.
It will help if the shop is kept as collateral (and as happened in Dr. Pasricha's case the shop was kept as guarantee for the loan raised for the purchase of house).
Anuj
The ultimate objective of section 54 shall be met if the house is purchased from borrowed funds.
It will help if the shop is kept as collateral (and as happened in Dr. Pasricha's case the shop was kept as guarantee for the loan raised for the purchase of house).
Anuj
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