The exemption u/s 54 is available only an individual or a HUF who transfers (or sells) a residential house/property that results in a long-term capital gain, and then invests the amount of gain in acquiring a new residential house. This exemption is available subject to fulfillment of the following requirements:
(i) The transferor shall be an individual or the HUF,
(ii) The asset to be transferred must be of long-term capital asset, being buildings or lands appurtenant thereto, being a residential house,
(iii) The income from such residential house shall be assessable under the head “Income from House Property”,
(iv) The transferor assessee should purchase a residential house in India within a period of one year before or two years from the date of transfer or construct a residential house within three years from the date of the transfer of the original house. (Construction must be completed within these 3 years.), and
(v) The new house property purchased or constructed has not been transferred within a period of three years from the date of purchase or construction.
Amount of Exemption. The amount of exemption u/s 54 is
- Equal to the amount of the capital gain if cost of new house property is more than the capital gain, or
- Equal to the cost of the new house property if the cost is less than the capital gain.
Deposit Scheme u/s 54. Where the amount of capital gain is not so utilized for the purchase or construction of a new residential house before the due date of furnishing of the return of income, it shall be deposited by him on or before the due date in an account with a public sector bank in accordance with the Capital Gain Account Scheme, 1988. The amount already utilized on the new house together with the amount deposited shall be deemed to be the amount utilized for the purchase of new house u/s 54. If the amount deposited is not utilized for the purpose of purchase or construction of new house within the stipulated period, then the amount not so utilized will be treated as long term capital gain of the previous year in which the period of three years expires. In such case the assessee is entitled to withdraw the amount from the bank.
Consequences of Selling the New House Before 3-years. If the new house property is transferred within a period of three years from the date of the purchase or construction, the amount of capital gains arising therefrom, together with the amount of gains exempted earlier, will be chargeable to tax in the year of sale of the house property. To attain this, the amount of exemption u/s 54 shall be reduced from the cost of acquisition to the new house, while calculating short-term capital gains on the transfer of the new asset.
Related Cases:
S. 54 of IT Act, 1961—Exemption—The assessee claimed exemption u/s 54 of the Act on capital gains on sale of flat on the ground of acquisition of two houses. Claim of exemption u/s 54 in respect of one house only acceptable—Pawan Arya vs. CIT Pvt. Ltd. (2011) 237 CTR 210 (P&H)
S. 54, 260A of IT Act, 1961—Capital gain—In absence of any evidence to indicate the structure being in place in respect of the property held and sold by the assessee, exemption u/s 54 of the Act cannot be granted—M.B. Ramesh vs. ITO [2010] 320 ITR 451 (Karn)
S. 54, 143(3) 147, 148 of IT Act, 1961—Reassessment—When the reassessment notices are issued and when admittedly there is no failure on the part of the assessee, who disclosed fully and truly all the materials facts for the assessment, it can only be construed as change of opinion and that it will not come under the category of escapement of assessment—CIT vs. K.K. Palanisamy [2010] 321 ITR 474 (MAD)
S. 54 of IT Act, 1961—Capital gain—The assessee sold self occupied flat and purchased a new residential house partly by taking bank loan and partly from his own fund. Thereafter, he partly repaid the bank loan in the relevant year out of the sale proceeds of the original flat. Since the assessee purchased the residential house before the due date of filing of the return of income, its claim u/s 54 is not hit by sub-s. (2) of S. 54 of the Act and, thus, the assessee is entitled for deduction u/s 54(1) of the Act—Ishar Singh Chawla vs. DCIT (2010) 130 TTJ (UO) 108 (ITAT-Mumbai)
S. 54EC & 147 of Income tax Act, 1961—Exemption—Reassessment—The third grand for re-opening the assessment relates to the exemption claimed u/s 54EC. For the purposes of the provisions of S. 54EC, the date of the investment by the assessee must be regarded as the date on which payment was made and received by the National Housing Bank. This was within a period of six months from the date of the transfer of the asset. Consequently, the provisions of S. 54EC were complied with by the assessee. There is absolutely Rio basis in the ground for reopening the assessment. Hindustan Unilever Ltd. Vs. DCIT & Ors [2010] 14 ITCD 73 (Bom)
S. 54 of the IT Act, 1961—Capital gain—Since the asset transferred is a residential house and the consideration received in the form of four flats in question are also residential flats, the assessee is entitled to deduction u/s 54 and not u/s 54F of the Act—CIT vs. Smt. K.G. Rukminiamma
S. 54 of IT Act, 1961—Capital gain—The meaning of the words “full value of consideration” in the Explanation to S. 54F(1) will not be governed by the meaning of the words” full value of consideration” u/s 50C of the Act, u/s 54F(4) of the Act, the net consideration which was not appropriated towards the purchase of the new asset has to be taxed if it is not deposited in the capital gains account. It is not necessary that the new asset should be registered before filing the return. Deduction u/s 54 of the Act is applicable since the net consideration is appropriated towards the purchase of the new asset—Gyan Chand Batra vs. ITO (2010) 6 ITR (Trib) 147 (ITAT-Jaip)
S. 54 of IT Act, 1961—Capital gain—The cost of acquisition has been defined u/s 55(2) of the Act and where assessee has converted the building into land by dismantled the same, sale made by assessee in such a situation can only be regarded as sale of land and not of a residential property nor of land appurtenant to residential property and thus, in respect of capital gain arising on sale of said land, no exemption u/s 54 of the Act is allowable—Subhash Chand Kapoor vs. ITO (2011) 132 ITD 587 (ITAT-Agra)
S. 54 of IT Act, 1961—Capital gain—No restriction placed any where in S. 54 that exemption is available only in relation to sale of one residential house. Therefore, in case the assessee has sold two residential houses, being long-term assets, the capital gains arising from the second residential house is also capital gain arising from the transfer of a long-term asset being a residential house and thus, the provisions of S. 54 will also be applicable to the sale of second residential house and similarly to a third residential house and so on—Rajesh Keshav Pillai vs. ITO (2011) 141 TTJ 183 (ITAT-Mum)
S. 54, 271(1)(c) of IT Act, 1961—Penalty—The assessee claimed exemption from capital gains for the purchase of residential house u/s 54 of the Act, 1961. In support of its claim the assessee furnished a copy of the iqrarnama. The genuineness of the iqrarnama was found in doubt and there was no material to establish that the possession of the property had been taken over by the assessee nor that the assessee fulfilled the conditions of S. 54 of the Act, therefore, the assessee is eligible to levy penalty u/s 271(1)(c) of the Act—Prem Prakash Gupta, Karta vs. ITO (2012) 13 ITR (Trib) 334 (ITAT-Chandigarh)
S. 54, r/w S. 139 of the IT Act, 1961—Capital gain—S. 139 fixes the different dates for filing the return for different assessees. In the case of the assessee, it is 31st day of July of assessment year. If a person has not furnished the return of the previous year within the time allowed under sub-s. (1), i.e., before 31st day of July of the assessment year, the assessee can file return before the expiry of one year from the end of the relevant assessment year. Sub.s (4) is in relation to the time allowed to an assessee under sub-s. (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-s. (1) of S. 139(1). The due date for furnishing the return of income as per S. 139(1) is subject to the extended period provided under sub-s. (4) of S. 139 of the Act—CIT vs. Jagriti Aggarwal
S. 54, r/w S. 54EC, of the IT Act, 1961—Capital gain—To attract S. 54 and S. 54EC what is material is the investment of the sale consideration in acquiring the residential premises or constructing a residential premises or invest the amount in bonds set out in S. 54EC. Once the sale consideration is invested in any of these manner, the assessee would be entitled to the benefit conferred under this provision. In the absence of an express provision contained in these sections that the investments should be in the name of the assessee only, any such interpretation would amount to Court introducing the said word in the provision which is not there. It amounts the courts legislating when the Parliament has deliberately not used those words in the said section—DIT vs. Mrs. Jennifer Bhide
S. 54 & 69, of the Income Tax Act, 1961—Unexplained Investment—The assessee has claimed that she sold 9,000 shares and earned long term capital gains of Rs. 4,99,062/- which is utilized in the construction of a residential house and for that she has claimed exemption u/s 54 of the Act. The A.O. made independent inquiry from share brokers and came to the conclusion that these transactions shown by the assessee are only attempt to introduce her unexplained income in the construction/purchase of house property with a view to get benefit of the provision of S. 54 of the Act and therefore, there was no capital earned by the assessee and the investment of Rs. 4,99,062/- claimed in the purchase/construction of residential house is the unexplained investment made by her out of unexplained income and thus, he added the same u/s 69 of the Act. The CIT (A) on the contrary deleted the impugned addition referring to materials and evidences available on record which according to him clearly suggests that these transactions cannot be held bogus. Tribunal held that burden of proving a transaction is always on the person asserting it to be bogus and this burden has to be strictly discharged by adducing legal evidence of a character, which would either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect. The Assessing Officer has failed to establish his case and to discharge the requisite burden cast on him. Therefore, in the given circumstances of the case the Id. CIT (A) has correctly came to the conclusion that the assessee has dealt in these shares and these transactions cannot held bogus. ITO Vs. Kusumlata (ITAT, Jodhpur)
S. 54, 271(1)(c), 274 of IT Act, 1961—Commissioner—Since there is no penalty order subsisting at the time of passing of the revision order, it is not proper on the part of the Commissioner to initiate penalty proceedings u/s 271(1)(c) through a revision order. Once a revised order is passed it is for the assessing authority to consider whether penalty is to be levied or not. If the assessing authority has not levied penalty where it is imperative then only the Commissioner of Income tax can in wisdom interfere in that matter—Smt. S. Sudha vs. ACIT (2011) 10 ITR (Trib) 206 (ITAT-Chennai)
S. 54, 54F of the IT Act, 1961—Capital Gain—Purchase of the two flats as one unit in the sale deed by the assessee has to be treated as one single residential unit and the assessee is entitled for full exemption under s. 54 of the Act—CIT vs. D. Ananda Basappa (Karn)
S. 48(1)(a), (2), 53, 54 of IT Act, 1961—Capital gain—When deduction is to be calculated u/s 48 of the Act, it has to be calculated under both sub-s. (1)(a) and (1)(b) of the same section and the deduction u/s 48(2) will have to be allowed on the amount calculated u/s 48(1)(a) before giving deduction u/s 53 and 54 of the Act—A. S. Chhachhi vs. CIT (2009) 311 ITR 293 (Delhi)
S. 54, of the Income Tax Act, 1961—Income from other sources—NRI Gift—The following substantial questions of law were framed:—” (I) Whether the learned Tribunal was right in holding the NRI gifts as genuine ignoring the fact that the assessee failed to prove the capacity of the donor who is stranger as gift was not made on any social occasion? . (II) The learned Tribunal was right in confirming the order passed by the learned CIT(A) deleting the addition of Rs. 1,20,000/- made by the A.O. treating the gifts as arranged by the assessee by utilizing his undisclosed income?” While dismissing the appeals and answering the two questions in favour of the assessee, the Rajasthan High Court held that:—”If the present case were to be examined on these parameters, it is clear, that in the present case, identity of all the donors is not in dispute, the transactions have been channelized through bank, and four of the gifts are by the blood relations, apart from the fact, that blood relationship is not necessary. There is no tangible material, collected by the assessing officer, to show anything, which may cast any doubt on the genuineness of the gift, or to establish, that the purported transactions of gift, were otherwise transactions of money laundering, or the like.” Cit, Bikaner Vs. Shri Ram Dev Kumar Chitlangia, Sriganganagar [2007] ITCD 196 (Raj)
S. 54 of the IT Act, 1961—Capital gain—Exemption u/s 54 of IT Act is to encourage citizens to acquire residential houses mainly meant for their use. Since neither the property sold nor the property purchased was intended to be used as residential house and only temporary structures were erected in a corner of each plot so as to obtain municipal number etc. and it was never intended for self occupation or for letting out and thus, the benefit provided u/s 54 of the Act cannot be extended to the assessee—ITO vs. Smt. Rohini Reddy (2009) 122 TTJ 423 (ITAT-Hyd)
S. 2(47)(v) & 54 of the IT Act, 1961, S. 53A Transfer of property Act, 1882—Capital gain—As per cl. (v) of S. 2(47) of the IT Act, transfer includes any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in S. 53A of the transfer of property Act, any transaction entered into in any manner which has the effect of transferring or enabling the enjoyment of any immovable property. Therefore, any transaction involving allowing of possession to be taken over or retained in part performance as referred to in S. 53A of Transfer of property Act would come within the ambit of S. 2(47) of the Act to hence, withdraw of exemption u/s 54 of the Act is justified—R. Kalanidhi vs. ITO (2009) 122 TTJ 405 (ITAT-Chennai)
S. 54 of IT Act, 1961—Capital gain—Assessee has simply taken the premises on license or rent for a period of two terms of 11 Months each against interest free deposit and this right to occupy the house cannot be termed to be the purchase of residential house and, therefore the claim of assessee u/s 54 of the Act cannot be accepted—Prafulchandra R. Shah vs. ACIT (2009) 124 TTJ 648 (ITAT-Mum)
S. 54F, of IT Act, 1961—Exemption—The assessee is entitled for deduction u/s 54F for the flat purchased in the name of his daughter subject to the restrictions under the proviso to S. 54F(1) of the Act—N. Ram Kumar vs. ACIT [2012] 150 TTJ 656 (ITAT-Hyd)
S. 54 of IT Act, 1961—Capital gain—The fact that the residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction u/s 54/54F of the Act—CIT vs. Gita Duggal.
S. 54EA of IT Act, 1961—Capital Gain—The Legislature has framed the scheme for the purpose of giving exemption from the capital gain tax by asking the taxpayer to deposit the amount in the capital gain bond scheme. Therefore, if the taxpayer wants to take benefit of exemption u/s 54EC, it has to deposit amount in capital gain bond and deposit of money in fixed deposit cannot be construed as deposit in capital gain bond for the benefit u/s 54EC of the Act—R. Vidhydharan vs. DCIT [2013] 141 ITD (ITAT-COCHIN)
S. 54F of the Income tax Act, 1961—Capital Gain—According to the Assessing Officer, assessee sold the property on 26.7.2007 and the new investment was made by the assessee before 31.3.2007. In other words, the construction of house was substantially completed by 31.3.2007 i.e., before the sale of capital asset which led to capital gain. As such the condition laid down u/s 54F of the Act was not fulfilled. Being so, the assessee is not entitled for deduction u/s 54F and the same was denied. CIT(A) also confirmed the order of the Assessing Officer denying deduction u/s 54F of the Act. ITAT, Hyderabad, Bench ‘B’ while remanding the matter back to AO held that:—”It is clear that whatever investment made by the assessee in construction of new property within the period stipulated u/s 54F after the sale of existing property the assessee is entitled for deduction u/s 54F of the Act. In other words, the investment in new property made by the assessee is not entitled for deduction u/s 54F of the Act to the extent made before the sale of property. Only that portion of investment made in the new property in accordance with S. 54F of the Act is entitled for deduction u/s 54F of the Act. Accordingly, we direct the assessee to furnish the details of investment made by the assessee in the construction of new residential building after the sale of existing property before the due date of filing of return of income u/s 139(1) of the Act. The Assessing Officer shall consider that investment made by the assessee in the construction of new property after the sale of existing property in terms of S. 54F of the Act. Accordingly, the issue is remitted back to the file of the Assessing Officer for the purpose of quantification of deduction u/s 54F of the Act” [2013] 27 ITCD 52 (HYD)
S. 54B of IT Act, 1961—Capital Gain—The Finance Act, 1970 also introduced S. 54B granting exemption in case the proceeds of sale of agricultural lands are invested in the purchase of other agricultural lands. The assessee had cultivated a part of its lands according to the Adangal Registrar and no further cultivation was possible because of lack of water. The use referred to in the section can only be regarded as such use as the lands are capable of with the aid of facilities available and therefore, the assessee cannot be denied the relief u/s 54B because he was actually unable to put the land to use due to vagaries of nature and non-availability of resources—ACIT vs. N. Raghu Varma [2013] 142 ITD 421 (ITAT-HYD)
S. 54EC of IT Act, 1961—Capital Gain—Once the Assessing Officer does not dispute the date of purchases, merely because the date of transfer of shares to assessee’s demat account is a later date, the date of transfer to demat account cannot be taken as date of purchase. The assessee has given an explanation for delay in transfer to his demat account, and his explanation has not been challenged or controverted and, therefore, under such circumstances, the Assessing Officer’s challenge to the capital gains being treated as long term capital gains is indeed devoid of legally sustainable basis—ITO vs. Ram Krishna Ghosh [2013] 142 ITD 544 (ITAT-KOL)
S.54F, of IT Act, 1961—Capital gain—Since all the conditions laid down in S. 54F of the Act have been satisfied for availing the exemption, same is to be allowed—Ajay Mishra vs. ACIT [2012] 20 ITR (Trib) 129 (ITAT-Bang)
S. 54, r/w S. 139 of IT Act, 1961—Capital gain—Sub-s. (1) of S. 139 provides that if a person has not furnished the return of the previous year within the time allowed under sub-s. (1) i.e. before 31st day of July of the assessment year, the assessee can file return before the expiry of one year from the end of relevant assessment year. The assessee proved the payment of substantial amount of sale consideration for purchase of a residential property on or before 31-03-2008, that is within extended period of limitation of filing. Only a sum of Rs. 24Lacs was paid out of total sale consideration of Rs. 2 crores on 23-04-2008, though possession was delivered to the assessee on execution of the power of attorney on 30-03-2008. Since the assessee, acquired a residential house before the end of the next financial year in which sale taken place, therefore, the assessee is not liable to pay any capital gain.—CIT vs. Jagtar Singh Chawla.
S. 54F, of IT Act, 1961—Capital gain—Merely because the assessee has let out the two flats to one person for use a single unit the same cannot entitle the assessee to claim benefit of deduction u/s 54F of the Act—ACIT vs. Sudhakar Ram [2012] 150 TTJ 703 (ITAT-Mum)
S. 54EC, r/w S. 147 of IT Act, 1961—Reassessment—A fresh application of mind by the Assessing Officer on the same set of facts amounts to a change of opinion and does not warrant reopening—Mrs. Parveen P. Bharucha vs. DCIT
S. 54EC, of IT Act, 1961—Capital gain—In order to avail of the benefit of S. 54EC, the capital gains have to be invested in a long-term specified asset within a period of six months from the date of transfer— ACIT vs. Raj Kumar Jain & Sons (HUF) [2012] 20 ITR (Trib) 212 (ITAT-Jaipur)
S. 54, r/w S. 27 and 269UA, of the IT Act, 1961—Capital gain—Since the owner of the flat was a co-operative housing society and as per rules of the society, there was no provision of transfer of land and, therefore, subsequent buyers were only tenants and not owners. The assessee is not entitled to exemption u/s 54 in respect of capital gain earned from sale of house property as he purchased only tenancy rights—Yogesh Sunderlal Shah vs. ACIT [2012] 138 ITD 194 (ITAT-Mum)
S. 54F of IT Act, 1961—Capital Gain—For the purpose of S. 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. The assessee purchased the new house in the name of his wife and there was no contribution of assessee’s wife. Therefore, the assessee is entitled to exemption u/s 54F of the Act.—CIT vs. Kamal Wahal [2013] 351 ITR 4 (DELHI)
S. 54, of the IT ACT, 1961—Capital Gain—ASHOK SYAL vs. CIT
S. 54F, of the IT ACT, 1961—Capital Gain—VASANTHI RANGARAJAN (DR. SMT. P.K.) vs. CIT
S.48, 54F, 55 of IT Act, 1961—Capital gain—S. 54 of the Act exempts capital gain to the extent that consideration is paid for the purpose of a residential house. Where assessee has acquired one residential house consisting of two flats, it cannot be said that the assessee has purchased two residential houses—CIT vs. Raman Kumar Suri
S. 54EC of IT Act, 1961—Capital gain—Benefit of exemption u/s 54EC can be granted within time-limit as prescribed by the legislative provision and not beyond 6 months. Hence, withdrawal of such benefit of exemption granted u/s 54EC beyond prescribed period is legally correct—Smt. Anuradha Venkatesan vs. ITO [2013] 140 ITD 421 (ITAT-Chennai)
S. 54 and 54F of the Income tax Act, 1961—Capital Gain—Exemption—During the assessment proceeding the AO noticed that the assessee during the relevant financial year has transferred land to a developer under a development agreement and has earned long term capital gain of Rs. 49,19,513. The assessee has also sold a house along with land and earned long term capital gain of Rs. 44,05,302. Assessee had claimed the entire amount of long term capital gain of Rs. 93,24,815/- exempt u/s 54 and 54F of the Act towards investment in a new house at Sagar Society, Banjara Hills, Hyderabad which was purchased for a total price of Rs. 1,43,26,665. The AO on interpreting S. 54 and 54F came to a conclusion that for claiming exemptions under both i.e., 54 and 54F, the assessee has to invest in two houses. On the aforesaid basis the AO disallowed exemption claimed u/s 54 of the Act and added back an amount of Rs. 44,05,302/- to the total income. While allowing the appeal, ITAT, Hyderabad Bench held that:—”We would like to reiterate that S. 54 and 54F apply under different situations. While S. 54 applies to long term capital gain arising out of transfer of long term capital asset being a residential house, S. 54F applies to long term capital gain arising out of transfer of any long term capital asset other than a residential house. However the condition for availing exemption under both the sections is purchase or construction of a new residential house within the stipulated period. There is also no specific bar either u/s 54 and 54F or any other provision of the Act prohibiting allowance of exemption under both the sections in case the conditions of the provisions are fulfilled. In the facts of the present case, since long term capital gain arises from sale of two distinct and separate assets viz., residential house and plot of land and the assessee has invested the entire capital gain in purchase of a new residential house, in our view, he is entitled to claim exemption both u/s 54 and 54F of the Act. We therefore direct the AO to delete the addition of Rs. 44,05,302/-. Hence, these grounds are allowed.” [2013] 26 ITCD 61 (ITAT-HYDERABAD)
S. 54 of IT Act, 1961—Capital Gain—Exemption u/s 54 only requires that the property should be of residential nature and the fact that the residential house consists of several independent units cannot be an impediment to grant relief u/s 54 even if such independent units are on different floors—CIT vs. Syed Ali Adil [2013] 352 ITR 418 (AP)
S. 54 of Income-tax Act, 1961—Capital gain—As per the Development Agreement entered into between the parties, the assessee and his brothers demolished the existing residential building and handed over the vacant space to the Developer for construction of the apartment. Since the residential building was demolished by the assessee itself, therefore, assessee is not entitled to claim benefit u/s 54 of the Act—CIT vs. Ved Prakash Rakhra
S. 54F of IT Act, 1961—Capital Gain—The ownership of the immovable property is always reckoned with the registered deed of conveyance. Therefore, in absence thereof the long term capital gains cannot be assessed in the hands of the assessee firm mere on reflection some entries in its books of account—Raja Fertilizers vs. ITO [2013] 21 ITR (Trib) 658 (ITAT-Chennai)
S. 54EC of IT Act, 1961—Capital gain—The language of S. 54EC is clear and unambiguous and it leads to the interpretation that the assessee can make the investment in two different financial years, provided in one financial year the investment made does not exceed Rs. 50 Lakh—ITO vs. Ms. Rania Faleiro [2013] 142 ITD 769 (ITAT-Panaji)
S. 50C & 54EC of IT Act, 1961—Capital gain—If the property has been sold at a lesser price but under the deeming fiction of S. 50C, the valuation adopted by the stamp valuation authorities is taken as sale consideration. Therefore, deeming fiction of S. 50C cannot be imported into S. 54EC and accordingly for the purpose of exemption u/s 54EC, the deemed value cannot be considered—Mrs. Nila V. Shah vs. CIT [2013] 152 TTJ 38 (UO)(ITAT-MUM)
S. 54 of the Income tax Act, 1961—Capital gain—Assessee invested the sale proceeds of his inherited house in purchase of a residential house in the name of his wife. The Assessing officer while completing the assessment, took the view that u/s 54F, the investment in the residential house should be made in the assessee’s name and in as much as the residential house was purchased by the assessee in the name of his wife, the deduction was not allowable. He reduced the deduction and computed the capital gains accordingly. Delhi High Court while dismissing the appeal of the revenue held that:—”It thus appears to us that the predominant judicial view, including that of this Court, is that for the purposes of S. 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. It is moreover to be noted that the assessee in the present case has not purchased the new house in the name of a stranger or somebody who is unconnected with him. He has purchased it only in the name of his wife. There is also no dispute that the entire investment has come out of the sale proceeds and that there was no contribution from the assessee’s wife. Having regard to the rule of purposive construction and the object which S. 54F seeks to achieve and respectfully agreeing with the judgment of this Court, we answer the substantial question of law framed by us in the affirmative, in favor of the assessee and against the revenue.” [2013] 25 ITCD 37 (DELHI)
S. 54F, r/w S. 263 of IT Act, 1961—Revision—The Assessing Officer had made requisite inquiries regarding investments made and the liabilities shown by the assessee and other expenses and which were explained by the assessee. Therefore, the order of the Assessing Officer cannot be held erroneous to invoke revisional jurisdiction u/s 263 of the Act.—Sunil Bhandari vs. A. CIT [2013] 141 ITD 10 (ITAT-JODHPUR)
S. 54, of the IT ACT, 1961—Capital Gain—Kishore H. Galaiya vs. Income-tax Officer [2012] 137 ITD 229 (ITAT-MUMBAI)
S. 54 of the IT ACT, 1961—Capital Gain—Deputy Commissioner of Income-tax vs. Ranjit Vithaldas [2012] 137 ITD 267 (ITAT-MUMBAI)
S. 54, r/w S. 27, 64 of IT Act, 1961—Capital gain—The assessee sold the property owned by him in inheritance and then purchased a new residential property in joint name with his wife and claimed deduction u/s 54 of the Act in respect of the amount invested in said residential property. The assessee is entitled for the benefit of S. 54 of the Act of entire amount invested in new property—ACIT vs. Suresh Verma (2012) 135 ITD 102 (ITAT-Delhi)
S. 54EC of the IT ACT, 1961—Capital Gain—CIT vs. CELLO PLAST.
S. 54B, 54F of IT Act, 1961—Capital Gain—For the applicability of S. 54B, what the purchaser of the land does with it, may not be relevant. If he puts a land falling u/s 54B of the Act for a non-agricultural use, that cannot be a circumstance to deprive the previous owner of his right to claim u/s 54B of the Act. The land is located in an urban area, cannot be itself be relevant to deny the benefit u/s 54B of the Act. What is essential is that it must be used for agricultural purposes for a period of two years period prior to the date of the transfer—Smt. Asha George vs. ITO [2013] 351 ITR 123 (KER)
S. 54F of IT Act, 1961—Capital gain—S. 54F does not provide for exemption on investment in renovation or modification of an existing house and what gains exempted is only construction of a house. Exemption is not allowable for construction/extension of / to the first floor—Pushpa vs. ITO [2013] 255 CTR 222 (Ker)
S. 54EC, r/w S. 50 and 48of IT Act, 1961—Capital Gain—Once there is transfer of long-term capital assets, exemption u/s 54EC is available—DCIT vs. Himalaya Machinery Pvt. Ltd.
S. 54 of IT Act, 1961—Capital gain—The exemption u/s 54 only requires that the property should be of residential nature and the fact that the residential house consists of several independent units cannot be an impediment to grant relief u/s 54 even if such independent units are on different floors—CIT vs. Syed Ali Adil.
S. 54F of the Income-tax Act, 1961—Capital gain—CIT vs. V. Pradeep Kumar.
S. 54F of the Income-tax Act, 1961—Capital gain—Abdul Gaffar vs. ITO.
S. 54 of the Income-tax Act, 1961—Capital gain—CIT vs. V. Natarajan. [2006] 154
S. 54 of the Income-tax Act, 1961—Capital gain—CIT vs. Rajesh Kumar Jalan.
S. 54E of the Income-tax Act, 1961—Capital gain—Smt. P.G. Bhanumathy vs. CIT.
S. 54F of the Income-tax Act, 1961—Capital gain—CIT vs. Pankaj J. Sanghvi.
Reference:
As Per Section 54, of the Income Tax Act, 1961-
Profit on sale of property used for residence.
54(1)Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset being buildings or chargeable under the head “Income from house property” (hereafter in this section referred to as the original asset), and the assessee has within a period of [one year before or two years after the date on which the transfer took place purchased], or has within a period of three years after that date constructed, a residential house, then], instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,—
(i) if the amount of the capital gain [is greater than the cost of [the residential house] so purchased or constructed (hereafter in this section referred to as the new asset)], the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or
(ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain.
(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme71 which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :
Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,—
(i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and
(ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.