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54

C.Balaji (Learner) (1867 Points)

30 January 2010

Dear friends,

A owns a Res. house.....if he sells the Res. house and invests the proceeds in two Res. houses....can he claim exemption u/s 54 for both houses???

Come out with case laws (if any)......

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7 Replies

CA PALLAVI VOHRA (Learner) (140 Points)
Replied 30 January 2010

Hello,

the condition u/s 54 is that the amount of capital gain shall be used to acquire or purchase new residential house within specified time.

Now if that amount is used to purchase or construct two houses, i think there is nothing in law that prohibits the number of residential houses to be acquired...

The Exemption shall definitely be available.

In regard to case law i will also have to search over net....if there is any??

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 30 January 2010

no, there is no restriction. u can claim for both the houses.There is no restriction provision as in sec.54f

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 30 January 2010

Hi as such the language of section is so clear that i dont think so there is any need of any case law.... Ofcoarse its allowed to purchase as many resicential houses and claim deduction u/s 54

Max Payne (employed) (2569 Points)
Replied 30 January 2010

Dear Balaji,

Pls google “S Anada Basappa Vs CIT (Karnataka) 309 ITR 329(2009), business line”

The decision is in favour of assessee.

While some sites have captured the essence of the judgement as that the assessee can buy 2 houses and effect necessary modifications to make them one house (which was the view of the tribunal), the Karnataka HC has held that the assessee will be allowed to build 2 or more houses from the capital gain on the transfer of one house, whether with or without such modifications.

The jist of the judgement is in interpreting the words “A residential house” as NOT necessarily “One Residential House”, using the section 13 of the general clauses act, 1897.