Urgent help require (regarding exemption u/s 54f)
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
27 February 2013
My Query is regarding claim of exemption U/s 54F of IT Act:
Whether exemption U/s 54F available if the assessee has entered into a PURCHASE AGREEMENT with a Builder for Purchase of Land and to construct house thereon within 3 years?
Means ONLY AGREEMENT TO PURCHASE is made & some portion of advance payment being made for land purchase.
Further land portion not registered till the due date of filling of ITR u/s 139.
EXPERTS ADVISE IS SOUGHT ON THE MATTER. REQUEST TO QUOTE ANY DECIDED CASE LAW ON THE MATTER.
Thanking You
Whether exemption U/s 54F available if the assessee has entered into a PURCHASE AGREEMENT with a Builder for Purchase of Land and to construct house thereon within 3 years?
Means ONLY AGREEMENT TO PURCHASE is made & some portion of advance payment being made for land purchase.
Further land portion not registered till the due date of filling of ITR u/s 139.
EXPERTS ADVISE IS SOUGHT ON THE MATTER. REQUEST TO QUOTE ANY DECIDED CASE LAW ON THE MATTER.
Thanking You
27 February 2013
Hi
Yes, it is available subject to:
1. Whole Cap. Gain to be invested in Cap Gain Scheme A/c with SBI before end of FY when trf made.
2. Construction of 1 house to be completed within 3 yrs after transfer of long term asset.
3. Asset trf should be long term asset.
4. You should not own more than 1 house on the date of transfer.
Thanks!!
Yes, it is available subject to:
1. Whole Cap. Gain to be invested in Cap Gain Scheme A/c with SBI before end of FY when trf made.
2. Construction of 1 house to be completed within 3 yrs after transfer of long term asset.
3. Asset trf should be long term asset.
4. You should not own more than 1 house on the date of transfer.
Thanks!!
Querist : Anonymous
Querist :
Anonymous
(Querist)
17 April 2013
thanks Mr. Vaibhav for recalling the law but request to please go through specifically the query asked by me.
So the query is still open and experts advice ought on the matter.
thanks
So the query is still open and experts advice ought on the matter.
thanks
02 August 2025
You're raising a very specific and **important query** about **Section 54F** of the Income Tax Act — regarding **exemption on capital gains** when only a **purchase agreement** is executed (with part payment) and **land is not yet registered** in the name of the assessee by the due date of filing the ITR under Section 139.
Let’s address your query clearly, legally, and with **judicial precedent**:
---
## ✅ **Your Core Query Summarized:**
> *Is exemption under Section 54F available if the assessee has entered into a purchase agreement with a builder (to buy land and construct a house), has made partial payment, but the land is not yet registered in their name by the due date of filing ITR under Section 139?*
---
## 🧾 **Legal Position – Section 54F**
Section 54F allows exemption from **capital gains tax** if:
1. The **net sale consideration** from a **long-term capital asset** (other than a residential house) is invested in:
* Purchase of a residential house **within 1 year before** or **2 years after** the date of transfer, or
* **Construction** of a residential house within **3 years** from the date of transfer.
2. The taxpayer **should not own more than one** residential house on the date of transfer.
3. The assessee must **deposit the unutilized amount** in the **Capital Gains Account Scheme (CGAS)** **before the due date u/s 139(1)**.
---
## 🔍 **Key Clarification – Registration Not Mandatory Before Due Date**
### ✅ Judicial View: **Exemption Available Even if Registration Not Completed**
It is **not necessary** that the **property must be registered** in the name of the assessee **before the due date of filing return** to claim exemption under **Section 54F**, as long as the **capital gains amount is utilized** or **deposited in CGAS** and **construction is completed within 3 years**.
---
## 📚 **Supporting Case Laws** (As Requested)
### 🔹 **CIT v. Sambandam Udaykumar** \[(2012) 345 ITR 389 (Kar.)]
> Held: The requirement is not that construction must be completed within 3 years. It is enough that the investment is made within the stipulated period.
### 🔹 **ACIT v. Rajeev B. Shah** \[(ITAT Mumbai)]
> Held: Even without registered sale deed or possession, if the assessee had entered into an agreement and made substantial payments, exemption under 54F is allowable.
### 🔹 **CIT v. Kuldeep Singh \[(2014) 49 taxmann.com 167 (Delhi HC)]**
> Held: Mere **execution of agreement to purchase** and **part payment** made is sufficient evidence of investment; registration is not mandatory for exemption u/s 54F.
---
## ✅ Practical Steps (to Ensure Compliance)
1. **Deposit the unutilized capital gain** in **CGAS account** **before the due date u/s 139(1)** (not 139(4)).
2. Maintain **documentary evidence**:
* Copy of agreement with builder
* Payment receipts (advance or staged payments)
* Plan of construction
* Timeline of construction
---
## 📌 Conclusion:
Yes, **exemption under Section 54F is allowed** even if:
* There is **only an agreement to purchase**,
* **Partial payment** is made,
* The **land is not registered** in the name of the assessee **before the due date of ITR filing**,
**Provided**:
* The assessee **invests the capital gains** in the new residential house **within the stipulated time**, or
* **Deposits unutilized capital gains** in **Capital Gains Account Scheme** before the due date of filing return **under section 139(1)**
---
Would you like a **template reply to the IT Department** or a **draft affidavit/declaration format** in such a case? I can help with that too.
Let’s address your query clearly, legally, and with **judicial precedent**:
---
## ✅ **Your Core Query Summarized:**
> *Is exemption under Section 54F available if the assessee has entered into a purchase agreement with a builder (to buy land and construct a house), has made partial payment, but the land is not yet registered in their name by the due date of filing ITR under Section 139?*
---
## 🧾 **Legal Position – Section 54F**
Section 54F allows exemption from **capital gains tax** if:
1. The **net sale consideration** from a **long-term capital asset** (other than a residential house) is invested in:
* Purchase of a residential house **within 1 year before** or **2 years after** the date of transfer, or
* **Construction** of a residential house within **3 years** from the date of transfer.
2. The taxpayer **should not own more than one** residential house on the date of transfer.
3. The assessee must **deposit the unutilized amount** in the **Capital Gains Account Scheme (CGAS)** **before the due date u/s 139(1)**.
---
## 🔍 **Key Clarification – Registration Not Mandatory Before Due Date**
### ✅ Judicial View: **Exemption Available Even if Registration Not Completed**
It is **not necessary** that the **property must be registered** in the name of the assessee **before the due date of filing return** to claim exemption under **Section 54F**, as long as the **capital gains amount is utilized** or **deposited in CGAS** and **construction is completed within 3 years**.
---
## 📚 **Supporting Case Laws** (As Requested)
### 🔹 **CIT v. Sambandam Udaykumar** \[(2012) 345 ITR 389 (Kar.)]
> Held: The requirement is not that construction must be completed within 3 years. It is enough that the investment is made within the stipulated period.
### 🔹 **ACIT v. Rajeev B. Shah** \[(ITAT Mumbai)]
> Held: Even without registered sale deed or possession, if the assessee had entered into an agreement and made substantial payments, exemption under 54F is allowable.
### 🔹 **CIT v. Kuldeep Singh \[(2014) 49 taxmann.com 167 (Delhi HC)]**
> Held: Mere **execution of agreement to purchase** and **part payment** made is sufficient evidence of investment; registration is not mandatory for exemption u/s 54F.
---
## ✅ Practical Steps (to Ensure Compliance)
1. **Deposit the unutilized capital gain** in **CGAS account** **before the due date u/s 139(1)** (not 139(4)).
2. Maintain **documentary evidence**:
* Copy of agreement with builder
* Payment receipts (advance or staged payments)
* Plan of construction
* Timeline of construction
---
## 📌 Conclusion:
Yes, **exemption under Section 54F is allowed** even if:
* There is **only an agreement to purchase**,
* **Partial payment** is made,
* The **land is not registered** in the name of the assessee **before the due date of ITR filing**,
**Provided**:
* The assessee **invests the capital gains** in the new residential house **within the stipulated time**, or
* **Deposits unutilized capital gains** in **Capital Gains Account Scheme** before the due date of filing return **under section 139(1)**
---
Would you like a **template reply to the IT Department** or a **draft affidavit/declaration format** in such a case? I can help with that too.
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