Section 54

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bhavik (Querist)
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19 September 2011 1 of my frnd. had invested 7.5 lac u/s 54 in capital gain specified scheme before due date of filing return on estimated basis

but while computing actual return the capital gain amounted 4.5 lac only & he claimed 4.5 lac u/s 54 ...

now becoz of personal need he want to withdraw excess 3 lac amount which he had invested from that capital gain scheme account

according to me it can be withdrawn theoretically as it is not capital gain & can't be taxed in the ambit of dis section ...

but banker is denying to withdraw d amount ...asking for AO's permission ...

is it necesarry to have ao's permission ... nothing is been specified in section in this regard ... what can be the practical position ... plz. reply .... thanks in advance ..

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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21 September 2011 Sec. 54 requires that if the sale proceeds are utilised either in purchase or construction of residential property, purchase has to be made either one year before or two years after the date of transfer. If it is construction, it has to be completed within three years of the date of transfer. If it could not be done within the due date of filing return for the year of transfer, it has to be deposited under the Capital Gains Account Scheme in a specified branch of a bank and utilised therefrom within the period. Where the construction is entrusted with the developer, the question of investment in capital gains account scheme would not arise, because handing over of possession without paying for the construction, would mean utilisation of sale proceeds. But the condition as regards completion of construction would not be satisfied, if the constructed plot is not handed over within three years of the date of transfer.

You have to consider the wordings of Section 54 it states sale proceeds are utilised and not the capital gain. Hence, it cannot be withdrawn

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