Deduction U/s 54F

Tax queries 978 views 5 replies

Neelesh Bajaj

Practising CA

30 Points Joined November 2009

As per Section 54F, Capital Gain proceeds should be used in Purchase or construction of Residential House with in a period of 2 years and 3 years respectively. Can any one discuss the issue as to in case of construction of house whether the house should be completed and if yes what should be the stage of completion and how to prove to the satisfaction of assessing officers as to that the house has been completed. As per the reading of the section 54F I interpret that it would be enough if I prove that the amount equivalent to the Capital gain has been utilised in construction of the House.

Replies (5)

P-A-W-A-N

TAX - MANAGER AT GURGAON

541 Points Joined September 2009

If construction is not complete within 3 years then no exemption is given to assessee

Because Sec 54F not Describe compliction Stage.

Also AO also is not satisfied with the amount is used in construction

Shiva Kumar

CA Final

208 Points Joined November 2009

With due regards to PAWAN, Mr. Neelash, your view is appropriate. In CIT Vs. SARDAMBAL KOTHARI Madras HIgh Court held that the it is SUFFICIENT if the consideration is invested within the stipulated time and it not NECESSARY to complete the construction within the time limit of 3 years.

ORder Date June 17, 2008. Sorry i don't have the CItation.

Shiva

Devendra

Article

72 Points Joined June 2009

Mr Shiva Kumar is Correct.If one can prove that amount invested in 54f has been fully utilised for the purpose of construction of house with 3 years deduction is allowed

Hareesh H Sharma

Cleared IPCC..now article

894 Points Joined September 2009

So Shiva sir isnt there any percentage of completion necessary for claiming the deduction...so the person only has to use the consideration amount within 3 yrs for 54F purpose...is that right?

CA Jignesh Kotak

86 Points Joined February 2011

Even I have one query related with Sec 54F :

If for the purpose of claiming deduction us 54f, I have decided to construct a new house and for that I have purchased a plot and amount related to cost of construction has been deposited in Deposit Account. Then whether I can claimed the cost of plot u/s 54F ?

Please reply soon Its Urgent