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capital gain exemption

The question is an individual has earned long-term capital gain and he wish to invest the same by purchasing of a new asset as a immovable property of house propety in name of either his major son or married daughter. It is eligible to exemption under provision of the sub-section F of the section 54 of the Income Tax Act, 1961?

Also request that to give the judgment reference in this.


A. Ramakrishnan, B.Com, L.L.B 


Dear Sir,

          If Assesse wants to take the exemption benefit of 54F then He has to purchase flat or immovable property on his name because it proved that assessee has purchased the house. he does not own more than one houses at the time of acquisition of property, otherwise he will bw not eligible.Presently I have no case in this regard.



Dear Sir,Section 54 of IT Axct 1961 says:

Following conditions should be
satisfied to claim the
benefit of section 54.
The benefit of section 54 is availa
ble only to an individual or HUF.
The asset transferred should
be a long-term capital asse
t, being a re
sidential house
Within a period of one year before or two
years after the date
of transfer of old
house, the taxpayer should acquire anothe
r residential house or
should construct a
residential house within a pe
riod of three years from the da
te of transfer of the old
house. In case of compulsory acquisition
the period of acquisition or construction
will be determined from the date of receipt of compensation (whether original or

So as per conditions of the above section 54 the long  term capital gain must be made by  you only by sellibng your old residential house proprty. Within 3 years of selling your old house property you hould invest the  entire capital gain income in buyinfg  or constructing a new house. and  that  too in sellers name. ?That means in your name and not in  your son's  or daughter's name., The long term capital gains tax exemption will be  available only if you buy only one house property.If your long g term capital gain made through fransfer of  old house exceeds the cost of new house  then exemptiom will vbe available proportionately as per the following formula. =cost o fthe newshouse * remaining sale proceeds of the old house. or by investing in Section 50 EC of IT Act for  6  months or capital gains scheme of all scheduled commercial bankj. The entire capital gain made through selling o .. This way you can save your long term capitql gain  tax total or partial  exemptiomn as explained by me above. old house if you can't immediately invest in buying or constructing a new house you  can save it by investing in capaital gain scheme of Sxceduled commercial Banks or PS banks. till you buy a new house. If you appreciate this answer and wish  to thank me please click the  thank you button onthis forum..


Please examine the case in the light of following

The Mumbai ITAT (Income Tax Appellate Tribunal) has recently held that if someone has made the entire investment for the purchase of a new house, he is entitled to get the full benefit of the income tax exemptions, even if the property has been purchased in the name of a close relative.

The law provisions require the seller to reinvest the gain amount within the stipulated time and there is no specific requirement that he himself should be the legal owner of the reinvested property.




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