Deduction u/s 54F was allowable even if borrowed funds were utilized for investment in new residential asset

Sainaba Hamza Koya Vs ITO (Kerala High Court) The Court held that Section 54F exemption is allowable even if construction of a new house is funded through borrowed money, provided the capital gains are later appropriated for repayment. Excess funds in Capital Gains Account must be released after retaining tax dues. Conclusion: Purchasing or constructing the residential building, by utilising the funds borrowed by  assessee and later appropriating the funds from the transfer of property to those transactions, were also permissible under Section 54F. Since the liability of assessee already dete...