Section 54F

[Ethirajan Parthasarathy]

A owns

One residential house and

One site.

A sells the house on 19/04/2021 and to off sets the Capital Gain by investing the required amount in another residential house on 30/6/2021 (section 54).

On the 15/6/2021 he sold the site and purchased another residential house on 30/12/2021 (section 54F)

As per provisio to section 54F (1), exemption available under that section will be denied if assesse invests in additional residential house with in one year after sale of site.

The word used is “Additional”. In this case the (section 54), new house was purchased first. Whether this house will fall with the meaning of “Additional” house even though bought before the purchases of second house (section 54F).

[sagar Basu]

Section 54 F is not available if the assessee purchases additional house property(other than new residential houses purchased to claim an exemption under section 54F) within a period of 1 year from the date of transfer.

As the earlier house has purchased to claim an exemption under section 54 not section 54F.

So in my view house purchased to claim exemption under section 54F does not fall under purchase of additional house

AI Summary

Purchase of additional residential house within one year may deny capital gains replacement-residence exemption on a site sale. A capital-gains exemption for replacement residence is denied if an additional residential house is purchased within one year after sale of the site; however, a house bought to claim a separate replacement-house exemption is not treated as the 'additional' house for that proviso, so the proviso would not bar the exemption arising from the site sale.