Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Benefit Of Section 54F Is Available If A Property Other Than Residential Property Was Sold?

QUERY: An assessee received residential house property under will during financial year 2000-01. The previous owner of property had purchased the property in the year 1975. The said property has been dismantled by the assessee and same is sold under the construction stage during the financial year 2009-10. Can assessee get exemption u/s. 54 or not. If not, can the assessee get the exemption u/s. 54F due to property is under construction ( i.e., said property is not residential property at the time of sales).
ANSWER: As I understand from the query, that the assessee has received a residential house property under will during the financial year 2000-01, which was purchased by the previous owner in 1975. Now dismantling the said property, the assessee has sold the said property in the financial year 2009-10. I presume that the previous owner was using the said property as residential house and was not used for any other purpose, and income was assessed under the head “Income from House Property”. So, whatever capital gain arises, after reducing the indexed cost of acquisition by the previous owner from the net sale price, the assessee is entitle to claim exemption under section 54 of the Act, if he purchases a new residential house within two years or constructs a new residential house within three years from the date of sale of original asset. If, however the said property was not used as residential house, then also the assessee is entitle to claim exemption under section 54F if he acquires or constructs a new residential house within prescribe period.

Posted in Income-tax

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