54F

Tax queries 550 views 2 replies

CA.Arun Kumar

CA Final

34 Points Posted on 26 November 2010

u/s 54F - Exemption from the capital gains arising out from transfer of capital gains other the residential house .
In this case the assessee has claimed the deduction before two yrs for "X" amount. Then he had entered in to a construction agreement with a flat promoter and paid the substantial amount also. The three yeara time will be expired in the forthcoming March 2011.It is expected that the construction will not be completed for next one year. The reason for delay is due to the ongoing problems between Builders and various government agency.
In this case where the assessee fulfills the conditions u/s 54F by making the substantial payments while entering the construction contract will be enough (or) failure in completion of the contruction will result deemed income of the assessee.

Thanks in advance

Replies (2)

CA Pratik Dharod

Bussiness

178 Points Posted on 26 November 2010

As per my opinion construction should be completed whithin 3 years. If not completed then amount of exemption granted before will be taxable on expiry of 3 years.

CA.Arun Kumar

CA Final

34 Points Posted on 26 November 2010

Hi Pratik,

With reference to the following case law, CIT vs R.L Sood and CIT vs Hilla.J.Wadia,(related to Purchase.)

Merely because the builder failed to hand over the possession of the flat to the assessee with in the stipulated period, the assessee cannot be denied the benefit of the said benevolent provision. This would not be in consonance with the spirit of the particular section.

Where the same logic can be applied in this case also. Here the assessee has paid the entire amount to the Builder in the phased manner as specified in the agreement. The Entire amount has been claimed as deduction has been already utilized for the construction.

As i had said earlier it was the Builder who had messed the things up as he is facing the legal troubles with govt agencies.

Thanks