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.

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.