Section 54 merely required purchase of new house within the specified period, source of funds for the purchase is irrelevant

Summary of Case Laws:-

S. 54 provides that if an assessee has LTCG on transfer of a residential house and he purchases or constructs a residential house within the specified period then the amount appropriated towards the new house shall be deducted from the LTCG.

The assessee sold a house and used the sale proceeds to buy commercial property. Subsequently (but within the specified period) he borrowed

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