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Capital gain

vipul ahuja (article) (46 Points)

02 February 2014

I have sold a commercial property and capital gains arised in it. With it I am also paying the enhanced compensation for some residential plot. So can I can claim exemption u/s 54 taking into account that I have not purchased a new residential plot but paying enhanced compensation. For the existing plot.

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Since you have sold a commertial property, section 54 is not applicable.

Regarding exemption under section 54F:

CBDT Circular : No. 667, dated 18-10-1993.

If the amount of capital gain for the purposes of section 54, and the net consideration for the purposes of section 54F, is appropriated towards purchase of a plot and also towards construction of a residential house thereon, the aggregate cost should be considered for determining the quantum of deduction under section 54/54F, provided that the acquisition of plot and also the construction thereon, are completed within the period specified in these sections.

As per Commissioner of Income-tax Versus Bharti Mishra 18th December, 2013, HIGH COURT OF DELHI, It is held that it is not stipulated or indicated in the Section that the construction must begin after the date of sale of the original/old asset.

So, if you have purchased the plot (compensation also forms part of cost) to construct residential house, you don't have any other house on that date and you invest the entire consideration now and satisfy the other conditions, you might be eligible for 54F. Again this issue is not very clear. pl wait for more replies.