Exemption under 54F

[MOHAMED YACOOB SHARIFF]

Sir,

One of the case which has audit objection was raised for the Asst. year 2009-10

Following is the brief facts of the case, Assesee sold the land on 02..05.2008.Purchased the old land and building on 01.02.2007, ( 15 months before the date of transfer of land). Assessee demolished the said building and constructed the new one for the self occupation. Assesee also owns one more property from which rental income is being offered to tax.

Assesee claimed the exemption for the long term capital gains, on the sale of land, for the investment made in the construction of residential building u/s 54F. Is it correct? or Not ? pl clarify

[CAGOPALJI AGRAWAL]

If the assessee can prove that the house has been constructed after 02.05.2008 then the amount invested in the whole construction would be deductible u/s 54F. Please refer the undermentioned case which may help you out.

2014 (1) TMI 446 - DELHI HIGH COURT

Commissioner of Income-tax Versus Bharti Mishra

Sections:- 054F,

AI Summary

Capital gains exemption for construction applies when the new residential building is proved completed after the transfer date. Exemption under section 54F for long term capital gains on sale of land depends on making the qualifying investment in construction of a residential house within the prescribed timeframe and proving that the construction was completed after the date of transfer; if the assessee can establish construction after transfer, amounts invested in that construction are deductible, and ownership of other rental property does not by itself prevent the claim.