capital gain on sale of plot where installments were paid during number of years

[Rahul Bagaria]

Hi I have a query : OLD PLOT - Total Cost - Rs. 19.2 Lacs Bought in Dec 2002 Paid for in installments over 6 years Possession in April 2006 Sold in Dec 2009 for Rs. 60 Lacs NEW PLOT - Total Cost - Rs. 98 Lacs Bought in Dec 2009 FLAT - Total Cost - Rs. 40.2 Lacs Booked in August 2008 Allotment Letter issued in Sept 2008 Full payment made to builder in Sept 2008 Agreement signed with builder in Feb 2009 The issues are: Will the flat be treated as 'SECOND HOUSE' in case I build a house on the new plot? If the flat is a second house, will I be ineligible for relief under Sec. 54(F) on long term capital gains if I construct a house on the new plot? In a situation where I want to offset the gains against the flat (and ignore the new plot), will it qualify? The doubt is because the 'ALLOTMENT LETTER' for the flat was issued in Sept. 2008 and this is before the one year period of the old plot being sold in Dec 2009.

AI Summary

Tax Implications of Selling Plot and Buying Flat: Eligibility for Section 54(F) Relief on Capital Gains Uncertain An individual inquired about the tax implications of selling a plot purchased in installments over several years and the subsequent purchase of a new plot and a flat. The main concerns were whether the flat would be considered a second house if they build on the new plot, affecting eligibility for tax relief under Section 54(F) on long-term capital gains. They also questioned if the flat could offset the gains from the plot sale, given the allotment letter's issuance date. The response indicated that more information was needed to provide a definitive opinion.