Sec 54F exemption

[CA AJAY KUMAR AGRAWAL]

1. Mr A & his wife were co-owners in a residential house. They sold the same in June 2014 for ₹ 40 Lacs & received ₹ 20 Lacs each. Mrs A paid ₹ 20 Lacs to a builder in June 14 against a flat. The flat was ready but it was not full payment. The builder issued a receipt stating the fact. She paid ₹ 20 Lacs more in June 16 & got sale deed executed. My question is whether the LTCG (on sale of earlier house) will be said to invested in FY 2014-15 & quality for exemption?

2. Mr A paid ₹ 20 Lacs advance in June 15 to a builder against a fully ready flat (on the above lines) but as full payment not made, he could not get it transferred. The flat is same in which he has been living on rent for last 3 years. Will his LTCG also qualify as above?

Kindly share your valuable views.

[Ganeshan Kalyani]

Sir, the query can be best replied by Sri Mariappan Sir and M/s Yagay and Sun. The contact number is available in the profile section in this TMI. Thanks.

[CA AJAY KUMAR AGRAWAL]

Dear Sir, Any opinion plz?

[CS Anshika Chitransh]

The provisions of sec 54A has been deleted.
In this case sec 54F will be apply, which specify that
As per sec 54f (1) : the capital gain arises from the transfer of any long-term capital asset, not being a residential house and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India.
But the assessee shall not own more than one residential house AND constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset.

As per sec 54f (4): The amount of the net consideration which is not appropriated by the assessee towards construction of the new asset before the due date of furnishing the return of income under section 139, shall be deposited by him in an account of capital gain account scheme.

Circular : No. 667, dated 18-10-1993
the cost of the land is an integral part of the cost of the residential house, whether purchased or built. Accordingly, if net consideration for the purposes of section 54F, is appropriated towards purchase of a plot and also towards construction of a residential house thereon, the aggregate cost should be considered for determining the quantum of deduction under section 54F, provided that the acquisition of plot and also the construction thereon, are completed within the period 3years.

As per your query, sale of plot in February 2014 then, you had required to deposit an amount of net consideration on the capital gain account scheme before the due date of ROI i.e. 31 july 2014 or 30 september 2014, as the case may be, if you have not deposited then no exemption will be available in financial year 2016-17,
If you have deposited the amount of net consideration in the capital gain account scheme before due date of ROI then, it is for beneficial to maintain exemption under this section to register 1 single sale deed .

Thanks

AI Summary

Capital gains exemption under section 54F requires timely purchase/construction and deposit of unutilised proceeds in CGAS. Section 54F permits exemption where net consideration is used to purchase a residential house within one year before or two years after transfer, or to construct within three years; the assessee must not own more than one residential house, and unutilised net consideration must be deposited in the Capital Gains Account Scheme by the return due date. The cost of land is included in the house cost for computing the deduction if acquisition and construction complete within three years; failure to deposit unappropriated proceeds by the filing deadline forfeits the exemption.