Sec54
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
07 July 2012
Mr.A buys a plot in April 2012 and enters into construction agreement with a party and pays the full money of 60 lakhs out of money withdrawn from his provident fund. In June 2012, he sells one of his residential house taxed under Income from house property and gets long term capital gain of 30 lakhs after indexation. Can he avail this gain under sec 54 against construction of house which will be completed by June 2013. Is it necessary to have nexus between the money invested earlier and money received from sale of house.
CA PARAS BAFNA
(Expert)
08 July 2012
To avoid any litigation and doubts about the nexus, treat the amount given to the contractor as loan and receive it back.
.
Payments made for construction, prior to transfer of original asset do not qualify for exemption U/s 54.
.
Why?? Section refers only purchase of a house before 1 year and not construction.
.
So, make the payment to contractor "Once More" and receive back the loan amount.
.
.
Payments made for construction, prior to transfer of original asset do not qualify for exemption U/s 54.
.
Why?? Section refers only purchase of a house before 1 year and not construction.
.
So, make the payment to contractor "Once More" and receive back the loan amount.
.
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