Question And Answer
Subject: Time limit to purchase new property to claim exemption u/s 54/54F
Querist: Samruddhi Athanikar
Answered by:
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Date: May 13, 2022
Query asked by Samruddhi Athanikar

For the purpose of section 54/54F r.w.s 45(2) , does the time limit to purchase the new property to claim the exemption u/s 54 and 54F apply from the date of conversion of capital asset into stock in trade or date on which stock-in-trade is sold?

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: This is a debatable issue. The intention of the legislature while enacting section 54 and 54F of the Income-tax Act, 1961(Act) is to ensure that the capital of the assessee is not eroded.

Expecting an assessee to invest under section 54 and 54F of the Act, albeit the Capital Gain accrues at a much later date will cause hardship to the assesses.

Therefore, according to the intention of the legislature, in cases where capital assets are converted to stock in trade, the period for investing under section 54/54F of the Act should be computed from the period of sale of the Stock in trade.

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