SECTION 54F

[manoj gupta]

The assessee has sold land for Rs. 16 lacs on 29.01.2009 and purchased another land for Rs. 16 lacs before the date of sale for construction of house within 3 years from date of sale and availed exemption of Rs. 16 lacs under section 54F. As per the provisions of income tax act, he has to construct house upto 28.01.2012. But till date, he has not spent any amount on construction of house. Now, the A.O. wants to disallow exemption u/s 54F in the assessment year 2009-10 as the house is not constructed. our view is that since the time limit for construction of house ends on 28.01.2012, exemption can be withdrawan only in assessment year 2012-13 and not assessment year 2009-10. Pls. clarify the position with relevant case laws if any.

Thanks

 

AI Summary

Dispute Over Section 54F: Tax Exemption Denied for Unbuilt House; Funds Not in Capital Gain Deposit Scheme An individual sold land for Rs. 16 lakhs and purchased another land for the same amount before the sale date, intending to construct a house within three years to claim an exemption under Section 54F. The Assessing Officer wants to disallow the exemption in the 2009-10 assessment year because the house was not constructed. The individual argues that the exemption should only be withdrawn in the 2012-13 assessment year, as the construction deadline is 28.01.2012. A response highlights that unutilized funds must be deposited in a Capital Gain Deposit Scheme, and if not used within three years, they will be taxed in the year the period expires.