Section 54/54f - sale of non agricutural land - Income Tax

Mr. X wants to sale his Non Argicutural plot of Land in Nashik, acquired in 1997 and wants to invest the sale proceeds in Purchase of a New residential unit in Mumbai . Mr. X already owns a Residential house in Mumbai which was purchased in 1999. Further he has bought an additional house in a under construction project in Mumbai, in 2013 , the construction is not complete and he has not been given the possession.

Query:

Since Sec 54F has a restriction that a person shouldn't own more than one house property, to claim the the exemption. Whether the he can claim the exemption U/s 54F by investing sale proceeds in the new house property.

Whether the Under Construction house property will be counted as one more additional unit and he will not be able to claim the exemption under Sec 54 F

Read the first provision of Sec. 54F ..............

Provided that nothing contained in this sub-section shall apply where—

(a) the assessee,—

(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or

(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or

(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and

(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property". ........"""

So, even if it may not be considered as residential unit for the section in present condition, but for next 3 years if you get its possession the condition will be breached. & hence the capital gain tax liability will arise.