Section 54-usage of funds in Capital Gain account for buying land and construction, purchase date

Tax queries 201 views 2 replies

Sunil Sharma

Associate Vice President

60 Points Joined July 2009

Sold apartment on Oct 3 2020 and deposited Capital Gains in IDBI Capital Gain account. Due to Covid situation could not use the funds till date. Can there be usage of the funds as under :

1.Purchase ready to occupy flat with immediate possession during Oct 2020 and request IT to condone delay of one month in view of the extraordinary Covid situation as I could not spend efforts in searching property until recently

2.Purchase land and construction house within next one year. In that case can funds in the CG account be used to buy the land by submitting the approved construction plan and then use additional funds for construction

3.Build additional floor on the ancestral property, primarily in the name of mother but assesee is also part owner of a small portion of this property (5%)

Any suggestions in this regard will be of great help

Regards

Sunil

Replies (2)

rama krishnan

12244 Points Joined May 2017

If you have deposited the capital gains amount in CGAS, then you have 2 years to purchase a property or 3 years to construct a from the date of sale of flat. so there's no need to worry.
in respect of 3rd query, in my opinion, there's possibility for disallowance of deduction under section 54 during the scrutiny proceedings, if selected for scrutiny but ultimately in appellate forums you may get in your favor

Sunil Sharma

Associate Vice President

60 Points Joined July 2009

There are few questions to be answered 1.in view of current lockdown just crossed 2 years from sale. So is there a possibility of condoning 4 weeks delay due to COVID lockdown 2.Can funds in CG account be used for purchase of Land and construction or should it be used solely for Construction bcoz without purchasing land I can’t construct