whether benefit u/s. 54 allowable or not??

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CA Abhishek Singh (Querist)
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09 January 2011 one of our client purchased a house property residential on 01/04/2010 for Rs. 25 lacs. he sold one of his residential property for Rs. 1500000 cost Rs. 500000 on 01/01/2011.

will exemption u/s. 54 will be available althought it was not purchased from money received on sale of residential property.

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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10 January 2011 Deduction u/s 54 will remain continue, it it was not calimed deduction u/s 54 earlier..

Vivek Raju P

Vivek Raju P (Expert)
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10 January 2011 yes it will be admissible, purchase has to be made either 1 year before or 2 years after the transfer of the residential unit. This case the time limit is only 9 months, hence covered.

K V Subba Rao

K V Subba Rao (Expert)
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10 January 2011 Eligibility condition of purchasing residential house within a period of one year before the transfer (sale)is satisfied; hence exemption u/s 54 can be claimed.

There is no stipulation and also not possible to establish nexus between purchase (made before sale) and sale (affected after purchase) transactions PRECISELY.

However, sale of old house would have resulted in increasing assets or decreasing liabilities from date of purchase (new house) to date of sale (old house). Better keep relevant information handy to the extent possible in the event of any ITO asking for details

A good question from a student

Manish Khatri

Manish Khatri (Expert)
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10 January 2011 There is basis condition to get benefit of Sec 54 that new house is purchased either 1 year before or 2 years after the transfer of the residential unit. Further there is no condition to use the money received on sale of residential property. Money have no colors. so u can utilize money lying in ur pocket or in ur bank a/c.