Section 54- Investment in residential house

Several disputes are in existence as to whether an assessee can buy more than one house under provisions of section 54 of the Income-tax Act, 1961. In the recent times High Courts and ITAT have taken a consistent view that in order to avail the exemption u/s 54 of the Act, investment in a “residential house” is required to be made. Here a residential house means a “dwelling unit”, which may encompass more than one flat or living places, if all of them together are meant for one family for living together. It is submitted that permitting investment of the sale proceeds in more than one house properties when the need  of housing is increasingly felt due to increase in population, would be a step in the right direction. Even otherwise, investment upto  Rs. 50,00,000 is encouraged and allowed u/s 54EC of the Act.

It is suggested that a provision be introduced whereby acquisition of more than one house be eligible for exemption u/s 54.

Source- Pre-Budget Memorandum 2014 on direct taxes by Institute of Chartered Accountants of India

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Category : Income Tax (25548)
Type : Articles (14993)
Tags : ICAI (2200) section 54 (110) section 54EC (77)

0 responses to “Make acquisition of more than one house eligible for exemption u/s 54 – ICAI”

  1. Ravinder Kaul says:

    Yes…why limit to one unit especially when parents may like to buy another property for all their children ( expecting more than one child).

  2. Dinesh chandra says:

    What is the public policy behind this provision of sec. 54. Today members of the family are forced to live at different places due to their working/service conditions. If they are fortunate enough to mannage sufficient funds by selling their old property then they may be allowed to use the funds, which belong to each and every member of the family, to buy the property at the place of their choice. This move will allow them to enjoy their constitutional freedom to acquire property anywhere in the country subject to local legal hassles. The technical ifs and buts of the law may be removed which give birth to unnecessary legal battle which makes the assessee poorer by the amount he spend to defend his or her position before the law . Transparent and unambiguous provisions of the law benefits both the parties ,I.e,the law abider and those who are entrusted with the constitutional duty to implement the law.
    Thanking all

  3. s sudarshana says:

    Very good suggestion. Why limit to one unit?

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