Exemption u/s 54F

Tax queries 757 views 3 replies

Dwithiya

dancak

24 Points Posted on 09 February 2009

The assessee in the present case has sold a property on 24.05.2006, and paid Rs. 6400000 out of the sale consideration received as deposit to a Builder for construction of another residential house. the same amount has also been taken as exemption u/s 54F.

The builder however has not yet (as on 09.02.2009) built the said house.

I would like to know if and when the amount will become taxable?...will the assessment of the year in which capital gains accrued be reopened?..or will it be taxable in the year of expiry of the term given in the Sec 54F.?

Replies (3)

CA Amit Kumar Khaitan

Research Analyst

360 Points Posted on 09 February 2009

In my opinion,

The section requires the assessee to build the house within 3 yrs from the date of transfer of his residential house. The house must be complete within the time period granted.

The facts point out that the assessee will not be eligible for any exemption.

The amount however will be taxable in the year of transfer itself. The deposit of money with builder can not be treated as equivalent to the CGDS scheme deposit, hence the amount of CG should have been taxed in the A.Y 07-08 itself

Ameet

1678 Points Posted on 09 February 2009

In my opinion, At the year of payment to the builder will be consiered as step toward the construction of house. therefore exemption will be granted. Since the house not completed within the period of 3 years. It will be taxable in the year of completion of 3 yrs as prescribed u/s. 54F. and will be taxable as LTCG.

jaideep

Articleship

44 Points Posted on 10 February 2009

In my opinion, At the year of payment to the builder will be consiered as step toward the construction of house. therefore exemption will be granted. as the period of 3 years will end on 23-05-2009, the maount of exemption granted earlier will be taxable only after the above said date as LTCG of current AY