Sunday, March 31, 2013



Chartered Accountant


Query 1]
I sold my ancestral land for Rs 33 Lacs on 24.05.2010. The sale proceeds are kept in S/B a/c since then. I acquired a residential house from G'Noida Authority ( allotted on 29.11.2007) in FY 2012-13 by executing lease deed on 18.06.2012, jointly with my husband out of other sources of finance, including Housing Loan, PPF withdrawal, etc. Can I claim exemption from Tax on LTGC on this house. On the date of sale of land, I owned another Flat jointly with my husband. If I cannot claim exemption, as above, can I buy a residential flat now and save Long term Capital Gains Tax of about Rs 10 Lacs (including Interest). The IT Return for FY 2010-11 is yet to be filed. I shall be grateful for your advice. [Neelam Gupta-]
1.      It appears that the land transferred is not an Rural Agricultural land
2.      Exemption can be claimed U/s 54F towards Long Term Capital Gain (LTCG) arising from transfer of any Land (ancestral or otherwise) if the Net Sale Consideration is invested for purchase of another residential house property within a prescribed time.
3.      Time limit to Purchase the Property:
Exemption u/s 54F is available if the Assessee invests net sale consideration for purchase of a residential house property
a] within O
ne year before or two years after the date of transfer; or
b] constructs a residential house within a period of three years from the date of the transfer of the original house.
4.      Scheme of Deposits:
Although under section 54F, the taxpayer is allowed 2 years to purchase or 3 years for construction of the house property, but the capital gain on transfer of the original assets is taxable in the previous year in which the transfer took place.
The return of income of that previous year is to be filed before the specified date i.e., due date.
Hence, the assessee will have to take a decision for the purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable.
To avoid the above situation, the Income Tax Act has specified an alternative in the form of a Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS).
The amount of net sale consideration, which is not utilized by the assessee for purchase or constructions of the new house before the due date of furnishing the return of income, need to be deposited by him/her under the Capital Gain Accounts Scheme, before the DUE DATE of furnishing the return. After Deposits, the amount already utilized by the assessee for purchase/ constructions of the new house, along with the amount so deposited, shall be eligible for exemption under section 54F in the year in which LTCG has arisen.

With above basic idea and background, opinions on your specific queries are as under:
1.      Though you have not purchased another residential house property within the prescribed time period, the amount should have been deposited by you in the CGDAS so as to enable you to claim the exemption. The first instance of payment thereafter should have been done by withdrawing from CGDAS A/c.
2.      Alternatively, the payment (from PPF Withdrawals, Housing Loan etc) should have been completed before 31.07.2011. Depending upon your payment till 31.07.2011, you can have an option of claiming an exemption u/s 54F either fully or proportionately. Your part ownership in an existing house property with your husband would not have impaired your exemption claim u/s 54F. 
3.      You don’t have any option of buying another residential house property now as the time frame for investment has expired.

Query 2]
I have purchased flat on 27.11.2012 (Sale Deed). I have taken home loan from SBI. I had taken another loan from employee’s credit co-operative society for the repairs and maintenance of our other home on 20.03.2013. This second home is in the name of my father (owner). For above, kindly guide me as to whether I can claim income tax rebate on both the above loan (interest and principal) as both loan are taken by me.  [Sandeep Gajbhiye-]
Ownership is a condition precedent for claiming deduction u/s 24(b) and u/s 80C towards the Interest and principal repayment of the loan. The second house property for which the loan is taken is belonging to your father and resultantly, you will not be eligible for any deduction u/s 24(b) & u/s 80C towards the interest & Principal repayment of the loan taken from your employee’s co-operative society.


  1. Dear CA Naresh , if that second house property would have been in name of Sandeep Gajbhiye he was eligible for deduction u/s 24(b) & u/s 80C towards the interest & Principal repayment of the loan taken from your employee’s co-operative society.

    1. Second house proeprty have an altogether different tax treatment. I have written the blog pointing out the tax treatment of second house property- can please read it.

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  8. Sir, My father had taken loan from The Vidarbha Premier cooperative society Nagpur. but after his death I am doing repayment hence can i ask for tax rebate.?
    if yes, is it for principal or Interest or both & under which section??? pls help.