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

Capital gain exemption under section 54F: unutilised deposits taxed when the construction period expires, withdrawal permitted.
Amounts not utilised for purchase or construction before filing the return must be deposited in a capital gain deposit scheme account and, together with any amount already utilised, are deemed the cost of the new asset; if the deposited amount is not utilised within the three year period, the unutilised portion is charged as income in the previous year in which that period expires and may be withdrawn in accordance with the scheme.