Capital gain

Three Brothers A,B and C purchased Agricultural land jointly using their own funds in the year 2003,

In the year 2010 the agricultural land was converted into Residential land by paying necessary charges.

now they have to sell the land and buy another residential property,
can they claim deduction under sec 54 on capital gain arising from the sale.
other than above property they also own other residential and commercial property

plz guide

Replies (4)
Here Deduction u/s 54 would not be allowed.

Rather, the Deduction under Section 54F will be allowed only if the such land has been sold and the amount of Net Consideration (i.e sale price and NOT Capital Gain) is invested into New House Property within next 2 years/ Construction within next 3 years.

Imp. Note- There is a condition u/s 54F that the assessee should NOT OWN more than 1 house property till date (excluding the new one which is being purchased). But in case of Joint Property the Condition of having 1 house till date would be allowed CO-OWNER WISE and therefore if any Assessee who is having only one house would be allowed Deduction u/s 54F but only for their respective share. Other Assessee who are having more than One House Would not be eligible for deduction on their share.
definitely the agricultural land converted into non-agricultural land wouldn't be sold in single part... make it clear that whether the land is proposed to sell in parts after making into several plots?

You can claim deduction under section 54 F ( but you must ensure that following conditions followed or not , if you followed these conditions then you can claim deduction)

Transferred Asset – The asset transferred can be any Long Term Capital Asset other than Residential House Property.

Capital Gain – The Capital Gain must be Long Term Capital Gain on transfer of such Capital Asset.

New Asset to be Acquired – The new asset acquired must be One Residential House Property in India.  

Time Limit for Acquisition of New HP –  New House Property must be purchased –

  • Within One year from the Date of Transfer or
  • Within 2 years after the Date of Transfer or
  • Constructed within 3 years after the Date of Transfer.
The agricultural land has been converted into Residential land and is sold as single plot the size is 3/4 th Acre

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