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Benefit of section 54f

manik (ca in practice) (420 Points)

29 May 2011

one of our clients had sold a peice of land for 15 lakhs on 01.05.2011 he had also bought a peice of land on 01.04.2011, now he had constructed a boundary wall on that peice of land and a small room from the sale proceeds of the above sale, my question is will he be able to get the benefit of sec. 54f or any other section???

pls advice!!!

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17 Replies

Vijay (Adamo Studio) (2112 Points)
Replied 29 May 2011

Yes will be getting the benifit of sec54

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 29 May 2011

yes benefit will be given under section 54

Suresh Prasad (www.aubsp.com) (15630 Points)
Replied 29 May 2011

Originally posted by : manik
	one of our clients had sold a peice of land for rs.15 lakhs on 01.05.2011 he had also bought a peice of land on 01.04.2011, now he had constructed a boundary wall on that peice of land and a small room from the sale proceeds of the above sale, my question is will he be able to get the benefit of sec. 54f or any other section??? pls advice!!!

In my opinion .........!!!!!!!!!!!!!

As per Sec54F(1) If the assessee has, within a period of one year before or 66[two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house then he can claim exemption upto the amount invested thereto form Sale proceeds.

In your client Case land was purchased before sale i.e. 01.04.11..............!!!!!!!!!!!!!

As per Circular No. 667, dated 18.10.1993 the cost of land is an integral part of the cost of the residential house, whether purchased or constructed.

However, client construct residential house after 01.05.11 but before 30.04.14 then he can be benifited by sec 54F.

Therefore if your client invested all sale proceeds then he can claim..!!!!!!!!!!!!!!!

indresh (engineer) (25 Points)
Replied 29 May 2011

In a similar case if sale proceeds of the plot are recieved in instalments before final registration is made and the same amount is invested in paying instalments of under construction property (again before registration), will the beenfit of section 54 be applicable?

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 29 May 2011

Originally posted by : Suresh_Smiter
	Originally posted by : manik one of our clients had sold a peice of land for rs.15 lakhs on 01.05.2011 he had also bought a peice of land on 01.04.2011, now he had constructed a boundary wall on that peice of land and a small room from the sale proceeds of the above sale, my question is will he be able to get the benefit of sec. 54f or any other section??? pls advice!!! In my opinion .........!!!!!!!!!!!!! As per Sec54F(1) If the assessee has, within a period of one year before or 66[two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house then he can claim exemption upto the amount invested thereto form Sale proceeds. In your client Case land was purchased before sale i.e. 01.04.11..............!!!!!!!!!!!!! As per Circular No. 667, dated 18.10.1993 the cost of land is an integral part of the cost of the residential house, whether purchased or constructed. However, client construct residential house after 01.05.11 but before 30.04.14 then he can be benifited by sec 54F. Therefore if your client invested all sale proceeds then he can claim..!!!!!!!!!!!!!!!

Agreed wit dis view.

CA PuRvI M!$rA (-) (2260 Points)
Replied 29 May 2011

yes he can claim d benefit....

akash gupta (article) (127 Points)
Replied 29 May 2011

yes he can provided theconstruction should be treated as residential house...i.e. what costitute residential house should be checked here otherwaise he can not take the benefit of sec. 54

ankur bansal (CA Final) (student) (124 Points)
Replied 29 May 2011

section 54 is ready for him ............

Shiv Shankar (Accountant) (78 Points)
Replied 29 May 2011

YES HE CAN CLAIM THE BENIFIT UNDER SEC.54

Rajnikant Vadigoppula (CA, CS And CMA Final) (919 Points)
Replied 29 May 2011

i agree with above u can claim u/s 54 itself

RAHUL CA-FINAL CS-FINAL M.com (student) (66 Points)
Replied 29 May 2011

In my opinion .........!!!!!!!!!!!!!

he can claim d benefit....

Tax pundit (FCA, AICWA,LL.B., DISA) (106 Points)
Replied 30 May 2011

Availability of exemption u/s 54F

Please note that the LTCG has arisen in this case from sale of land. Hence there is no question of applicability of section 54. Section 54 will apply where the LTCG is from transfer of a residential house whilst section 54F will apply where the asset transferred is one other than a residential house.

Akash Gupta is correct in saying that exemption u/s 54F is available, provided that the new construction in the land can be called "residential house". As to hwat is a 'reisdential jouse, common sense meaning will apply.

Now to the extent of the land purchased. ofcourse the cost of land willl be added to the building construction, to arrive at the cost of the new residential house. However the extent of the land should be such that it can be said to be 'appurtenant to" the residential house in question. It would be a question of fact.

The case has to be presented neatly. First of all, say that the client has constructed a new residential house, not just a small room. Decide on the extent of land which you can call as appurtenant to the said house.

1 Like

Gourav Kapoor (CA Final Student) (2977 Points)
Replied 30 May 2011

Originally posted by : Shiv Shankar
	YES HE CAN CLAIM THE BENIFIT UNDER SEC.54

Regards

Gourav

if u are a CA passionate, this is for you...CA PASSION

C.Balaji (Learner) (1867 Points)
Replied 31 May 2011

Sec 54 - Transfer of Residential house and purchase or construction of Residential house... Here, Land is transferred and therefore sec 54 does not get attracted....

Sec 54F - Transfer of Capital Asset other than Residential house and purchase or construction of Residential house...

Here, Land is transferred and the room constructed should be a Residential house for claiming exemption u/s 54F... Moreover, entire sale proceeds should be invested to get exemption of entire capital gains orelse only Proportionate amount will be allowed as exemption... the amount can be deposited in Capital Gains account scheme before the date of filing of return.