Question And Answer
Subject: Sec. 54F
Querist: P.S.Kulkarni
Answered by:
Tags: , ,
Date: June 7, 2022
Query asked by P.S.Kulkarni

Assessee is an individual and partner in partnership firm engaged in the business of advertising. 

In the A.Y. 2008-09. Assessee received a amount of Rs. 1 cr against his right in the property,  which is liable for longterm capital gain.

Assessee invested the amount of Rs. 1.25 cr for purchase of residential bungalow alongwith the land appertatnent their to by executing the Development Agreement and power of attorney  by paying full stamp duty and also taken the possession of the said property.  The assessee has not carried out any Development on said property and after holding for period of 42 months sold the said property as it is and offered the LTCL in A.Y. 2012-13, which is accepted U/sec. 143(1)(a) of the Act.

The issue is which assessee has invested the said amount for purchase of house U/Sec.54F he has paid the entire consideration for purchase of bungalow and land appurtenant there to. However instead of executing the Purchase deed he has executed the Development Agreement.
Assessee has not carried out any development activity on the said house property.
AO has denied the claim only on the ground that since assessee has executed the development agreement, he not entitled for exemption U/SEc.54F. Even though department has accepted the LTCG on sale of same property after period of 3 years.
The issue is it is an undisputed fact that the assesse has purchased the property which is residential property but because the assessee has executed Development agreement whether his claim can be denied

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Yes, the claim can be denied as the assessee has not constructed or purchased a residential house property within the stipulated time as per the statute.

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