Alpesh Navinbhai Barot Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that AO must recompute LTCG after considering indexed cost and allow 54F deduction if gains were utilised before extended due date; Tribunal ruled that non-deposit in Capital Gains Account does not bar 54F relief if funds are used for construction within Section 139(4) timeline; Case remanded to AO to verify cost of acquisition, ownership condition, and construction expenses before finalising capital gains.
Deduction under Section 54F –
Statutory Background
Section 54F of the Income-tax Act, 1961 grants exemption from Long Term Capital Gains (LTCG) where net consideration arising from transfer of a long-term capital asset (other than a residential house) is invested in construction or purchase of a residential house within the prescribed period.
Basic Conditions:
The assessee must not own more than one residential house on the date of transfer.
The new residential house must be purchased within 2 years or constructed within 3 years from transfer.
Unutilised capital gains must be deposited in the Capital Gains Account Scheme (CGAS) before the due date u/s 139(1).
Proviso to Section 54F(1): Denies exemption if on the date of transfer the assessee owns more than one residential house (other than the new one) or purchases another residential house (within 1 year before or 2 years after) or constructs another house (within 3 years).
