Section 54 & 54 f applicabilty

My client has sold LTCA & deposited the net proceeds in CGAS a/c for claiming exemption under section 54F. Next year he is planning to sell one residential house property & the net receipt from the sale of such residential house property will also be invested in the construction of the same house for which we took exemption under section 54F. can he claim an exemption under section 54. In short, can we take exemption under section 54 & section 54f for the construction of one house..

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Quick Summary
This discussion explores the complex tax implications of claiming exemptions under Section 54 and Section 54F of the Income Tax Act for the construction of a single residential property. While the Income Tax Officer (ITO) may deny the claim due to differing assessment years, some case law suggests it might be permissible. The query also touches upon using commercial plot sale proceeds to repay a home loan for construction and the applicability of Section 54F in such scenarios, referencing relevant case law.

As the assessment years differs, it is not allowed by ITO, but some case laws favor the claim of assessee.

Sir, please answer this one also.

My client is planning to take a home loan for residential house construction. after utilizing the amount deposited in CGAS a/c during the current year  There is one commercial plot that will be sold later during the year as soon as the period of holding of such commercial plot will be more than 24 months & the net receipt will be used to repay the loan amount. Can we t claim under section 54f in this case?

We can claim the exemption in case of repayment of loan where residential house property is bought one year before the transfer of LTCA so accordingly, it should be allowed in the above case also. please guide.

As the proceeds are going to be invested in same house property, the assessment year of sale of original property & the new commercial plot, should be same, otherwise, it will be difficult to claim the exemption.

Sir, by original property you mean whose net receipt we are depositing in CGAS a/c in the current year?  

 

Yes, otherwise sec. 54F would not be applicable to second property sale.


Sir, as per the case law referred by you earlier  (ACIT New Delhi v Mahinder Kumar Jain) we can claim an exemption under section 54F in multiple years.

 

That is what it means, you may need to go for appeal and even further, but in normal terms it is denied.

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