ITAT allows Multiple Year Exemption u/s 54F for an under Construction House - H&R Block| Blog

ITAT allows Multiple Year Exemption u/s 54F for an under Construction House

Income Tax Scrutiny
How to Deal with Scrutiny Assessment Notice?
September 7, 2017
Advantages and Disadvantages of GST
September 19, 2017
Show all

ITAT allows Multiple Year Exemption u/s 54F for an under Construction House

Taxes arising from capital gains often become a reason for conflict between taxpayers and income tax authorities. When it comes to the sale of any property other than a residential house, section 54F comes as a relief for taxpayers by offering exemption on resulting capital gains.

However, if  a taxpayer wants to claim this exemption, he must understand the necessary conditions prescribed under the law:

  1. Assessee should invest the net sale proceeds of the property in the purchase of a new house.
  2. New property should be purchased within a period of 2 years or constructed within a period of 3 years from the date of sale of the original asset.
  3. The taxpayer should not own more than one house on the date of transfer, other than the one bought for claiming exemption under this section.
  4. He should not purchase within 1 year or construct within 3 years any other residential house other than the one bought for claiming exemption under this section.

Sometimes, the lack of clarity or misunderstanding of these conditions does lead to disputes between the taxpayers and the tax department. Recently one similar dispute came for adjudication before Delhi bench of Income Tax Appellate Tribunal (ITAT). The major dispute, in this case, was regarding, whether the taxpayer can claim the section 54F exemption for an under construction for more than one year for the same house.

You can read the complete case here.

Neha Joshi
Neha Joshi
Neha Joshi is a Chartered Accountant and an Assistant Manager at H&R Block. She is the Head of Content and is responsible for strategizing the entire content for website, PR and social media. She comes with a rich experience in publishing where she wrote books for various international professional qualifications. She was also a trainer for the subjects she wrote.

Leave a Reply

Your email address will not be published. Required fields are marked *