Re: [aurangabad_ca] Exemption u/s 54F of I. Tax Act, 1961

Wednesday, December 9, 2009 11:08 PM By Livemail

 

Dear Mr. SANTOSH,
Thanks for the reply. But my point was in respect deposit of capital gains in the Capital Gains Accounts Scheme and thereafter making withdrawal from that and at the same time taking housing loan and purchasing a new house. In this case my point is that as per the plain reading of Sec. 54F(4) of the Act, the withdrawal should be utilised for purchase of the new house, whereas in my case the new house was purchased after taking housing loan. Further, I had also taken deduction u/s 80 C of the Act for repayment of housing loan and for interest thereon under the head income from house property.
The case law referred by you is even otherwise not required, as the law allows to purchase the house even within a period of one year before the sale of house. In that circumstances the payment will have to be made either from the loan or from any other source (may be from his own past accumulated funds).
 
REGARDS.

CA. P.C.GODHA
P.C.Godha & Co.
Chartered Accountants
304, Shalimar Complex,Church Road, M. I. Road
JAIPUR- 302 001 (INDIA)
Phone: (O) 0141-2365210  (R) 0141-2521958  (M) 094140-57066


--- On Wed, 9/12/09, santosh gogave <gogavesantosh@gmail.com> wrote:

From: santosh gogave <gogavesantosh@gmail.com>
Subject: Re: [aurangabad_ca] Exemption u/s 54F of I. Tax Act, 1961
To: aurangabad_ca@yahoogroups.com
Date: Wednesday, 9 December, 2009, 1:42 PM

 
Refer Bombay HC decision in the case of CIT vs. Dr.P.S. Pasricha, where it was held that section 54 releif was allowable even if new house is purchased from borrowed funds.
 
Santosh.

On Wed, Dec 9, 2009 at 10:39 AM, CA. P. C. Godha <capcgodha@yahoo. co.in> wrote:
 

One of my clients to avail exemption u/s 54F of the I. Tax Act on long term capital gain decided to purchase a new residential house. But, since the new house could not be purchased before the due date of filing return of income, he deposited the total amount of net sale consideration of Rs. 25 lacs in the Capital Gains Accounts Scheme, 1988 as per sub section (4) of Section 54F.

Thereafter, within the prescribed time limit he purchased the new house costing Rs. 25 lacs. He withdraws the above deposit of Rs. 25 lacs and bank credited the amount in his savings bank account. He also took a housing loan of Rs. 20 lacs for purchase of the said new house. This loan amount was also credited by the bank in his savings bank account. Out of the total amount of Rs. 45 lacs, he paid the cost of new house amounting to Rs. 25 lacs and balance of Rs. 20 lacs was utilized for some other purposes.

Thereafter in every year he is claiming deduction u/s 80C for housing loan repayment and also interest on housing loan under income from house property.

Now the ITO wants to tax the capital gain u/s 45 of the Act and also after reopen the case wants to disallow the claim u/s 80C and interest claim of housing loan from income from house property. Is his action correct under the Law? Kindly advice with case laws, if any.

 

REGARDS.

CA. P.C.GODHA
P.C.Godha & Co.
Chartered Accountants
304, Shalimar Complex,Church Road, M. I. Road
JAIPUR- 302 001 (INDIA)
Phone: (O) 0141-2365210  (R) 0141-2521958  (M) 094140-57066

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