I have sold out my house at Kerala (say a gain of Rs.30 lakhs). With the proceeds received, I intend to go for purchase of a new/resale flat at Kolkata for Rs.15 Lakhs and also another one at Kerala for say Rs.14 Lakhs. Can I get exemption from capital gains for investment in both places, i.e. one at Kolkata and another one at Kerala ?
To illustrate: Mr A, having a large house, sells it for Rs 2 crore (Rs 20 million) making a capital gain of Rs 1 crore (Rs 10 million). Out of the capital gain of Rs 1 crore, Mr A purchases two flats each of Rs 50 lakh (Rs 5 million) on the seventh and eighth floors of a building within the time laid down by the law.
Strict interpretation of Section 54 leads to the view that Mr A will be entitled to exemption of only Rs 50 lakh being purchase of 'a' residential property on the seventh floor.
In other words, the purchase of the second residential property on eighth floor will not be eligible. He should have purchased one large flat on either seventh or eighth floor. This view of the Income tax Department has been recently upheld by t ...more