About section 54f

Please guide me……………….

 

Samir purchased a Land at Bharuch for Rs. 7.5 lacs in F.Y. 2006-07. He purchased a Land at Surat for constructing Residential House on it for Rs. 10 lacs in July 2011. He aggreed to sell the Land situated at Bharuch for Rs. 80 lacs in April 2012. He will receive Rs. 35 lacs in June 2012 and will invest whole the amount in construction of the new house on the land at Surat. Thereafter he will receive Rs. 25 lacs in March 2013 and will invest whole the amount in construction of the new house on the land at Surat. He will receive a final payment of Rs. 20 lacs in July 2013 and will invest Rs. 10 lacs in construction of the new house on the land at Surat. In July 2013 Samir will make a registered Sale Deed in favour of buyer. Other conditions of S. 54F are satisfied.

 

Q-1 : In which year Samir can avail benefit of S. 54F ? In the year of Receipt or transfer

  of property.

 

Q-2 : Can Samir get benefit of S. 54F on Land and Construction also ?

 

Replies (1)

According to the definition of transfer in section 2(47) of the Act, it means sale, exchange or relinquishment of asset.  thus as samir has agreed to sell the land at Bharuch in Apr12, it means he has relinquished his right, so the Capital Gains would be taxable in F.Y.2012-13 whihc is A.Y. 2013-14.

As the Final payment is received by Samir in Jul13, and the construction of the building on the land at Surat is under progress, so the Capital Gains would have to deposited in the Deposit Scheme before the due date of filing the return of income.  the same would be taxable after Mar15 if the construction is not completed till that time, or the compelted cost of construction of the building is less then the net consideration received for the land sold at Bharuch

Yes as he is constructing the building on the land at Surat, he will get the benefit of 54F both for Land & consturction of building.

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