Exemtion/Deduction under section 54 of I.T.Act

[SANJAY BAHETI]

Dear Experts,

one of my client being a lady has owned a residential house property since 2005.

She is regular I.T.Assesse. During F.Y.2013-14 for which a return is to filed now prior to 31/03/2015.

She has sold the said house in June,2013 and purchased another residential house property in April,2013.The investment in new house property from means of unsecured loans from relatives which is exceeding the sales proceeds from the sale of old house property likely to be sold in June,2013.

Thereafter she has paid the said unsecured loans from the sales proceeds on sale of old house property during the same year.

Now query is as whether she can claim a deduction under section 54 of I.t act to avoid long term capital gain on sale of house property as she invested entire sales consideration in purchase of another new house property to claim the benefit of section 54 or not.

Please reply at the soonest to enable file the income return prior to 31/03/2015.

Thanks in advance for prompt reply.

AI Summary

Can a taxpayer claim Section 54 deduction for reinvesting property sale proceeds into a new home within the same fiscal year? A client, a regular income tax assessee, sold a residential property in June 2013 and purchased another in April 2013 using unsecured loans from relatives, which exceeded the sales proceeds. The client repaid these loans with the proceeds from the property sale within the same fiscal year. The query seeks to determine if the client can claim a deduction under Section 54 of the Income Tax Act to avoid long-term capital gains tax, given the reinvestment of the entire sales consideration into a new residential property. The response is needed urgently to file the income return by March 31, 2015.