Comments on: Allowability of exemption u/s. 54F if builder does not complete construction of house within three Years?

By: Maheswaran

Maheswaran — Sat, 26 Nov 2011 18:44:14 +0000

Sir,

It gives good in-sight of many scenarios faced w.r.to the sec54 exemption.Please clarify for my scenario as under:

In July’11 I sold (executed sale deed)of my commercial office space which I was holding for more than 3 years.Before the said sale,I already booked an under construction flat in Nov’09 (date of allotment letter) which was registered in Jan’2010 (on which date about 50% of the total amount was already paid to the builder)and the flat is still in under construction stage in Nov’11 which is expected to get OC and delivered for actual posession in Mar’12.

Under the above circumstances, am I eligigible to get 54F exemption, as wthin 3 years from Nov’09,I have got the OC & posession of the fully constructed house.Will the booking date of Nov’09 of the residential flat, which is actually **prior and not after ** the sale deed of commercial office prohibits me from getting the 54F exemption??

Many thanks once again

Maheswaran
27 Nov’11

By: veer singh

veer singh — Fri, 29 Jul 2011 07:10:35 +0000

we had sold the house property in the AY 2011-12 and amount of capital gain on house property invested to purchase a land but construction not completed with on this land in 3 year. so in this case what will be tax treatment.

By: Natasha Mehra

Natasha Mehra — Mon, 25 Jul 2011 12:15:27 +0000

I was allotted a pre-construction property in India in 2006. I paid monthly installments for about a year. It got completed and I got the possession only towards the end of 2009. Seems like from your article, one can argue that the date of 2006 should be considered to determine whether it is a LT or ST capital gains scenario.
Can you please clarify? Great article !!

By: Krishna

Krishna — Wed, 29 Jun 2011 10:16:08 +0000

Excellent article. can I have your contact information. I have a similar case and I am going for appeal. want to seek your guidance.

regards,
Krishna

By: Nihit Dalmia

Nihit Dalmia — Wed, 08 Jun 2011 14:40:13 +0000

Hello Sumit, even if cost of shares is nil, then also capital gains cannot amount to Rs.15 lakhs, it is not possible to assume such situation. If you will invest the sale consideration received from sale of shares into purchase/construction of house property, there will be no capital gains tax under exemption from section 54F. So, how can we assume that you have capital gains tax of Rs.15 lakhs, it is absurd.

Now, you need to invest entire 15 lakhs into purchase 1 year before or 2 years after date of transfer of asset(i.e. date on which your asset was sold) or 3 years in case of construction.

Since you have paid only 4 lakhs out of your sale consideration, you will get exemption proportionately under section 54F. You will not be entitled to full exemption.

Reason: Loan amount does not satisfy condition of payment from sale consideration. But suppose, you pay off the loan within 3 years from date of transfer(i.e. when you sold your asset), then you will be eligible, as you have ultimately paid your sale consideration received towards loan disbursement.

By: Nihit Dalmia

Nihit Dalmia — Wed, 08 Jun 2011 13:51:27 +0000

You have sold flat on 10 March 2009. You want to Purchase Flat on 2 Feb 2011. You can purchase a ready flat upto 10 March 2011. You can purchase a flat under construction upto 10 March 2012.

Now, since the expected date of construction is Dec 2011, you are very well covered under 3 years of construction.

Please take care of following things –

1. Get Allotment letter immediately on purchase of an under construction property.
2. Check that you have invested maximum amount of your sale consideration(i.e. the amount you received on sale of your old flat) into your new flat before 10 March 2012.

Now, in case, the builder is unable to provide the possession on or before 10 March 2012, you will still be eligible for section 54F exemption under capital gains.

Concl: You are eligible for 54F exemption

By: SHARAD MOHAN

SHARAD MOHAN — Tue, 01 Feb 2011 12:08:28 +0000

i have a query. i had sold my flat on 10 march 2009 and am NOW (2nd feb 2011) going ahead for buying an under construction property which is expected to be completed by end 2011.

will i be entitled to the tax benefit under 54.

rgds..sharad

By: Sumit

Sumit — Tue, 13 Apr 2010 03:36:36 +0000

Thanks for such wonderful information.

I have a question on Section 54F exemption. In case where the assessee buys a residential property by taking a loan, will such purchase qualify for exemption under section 54f. for example, there is Rs. 15 lakhs received as consideration for sale of shares (long term capital gain). Assume capital gains is also Rs. 15 lakhs. The assessee buys a new property for Rs. 20 lakhs, taking Rs. 16 lakhs as loan and paying 20% from his pocket, will the exemption be available under section 54F.

By: ASHOK L. GOSAR

ASHOK L. GOSAR — Sun, 13 Dec 2009 05:55:41 +0000

Dear Rajesh and Suchi,

you have provided very good information.

Thanks,
Ashok Gosar