Exemption u/s 54f or Business income?

I had been inherited with an agricultural land which I had converted to Non-agricultural plots in 2009 and then I had sold some of the plots to more than one person (different-different purchaser) in 2009, 2010, 2011 & 2012 (the major share of amount has come from the plots sold in June 2011 till March 2012). The amount which I received from the sale was Invested in an under construction residential flat in June 2011, the agreement value for the flat was Rs. 27 Lacs. And the amount which I received after the sale of plots was approximately Rs.24 lacs. Now I wanted to know if I could claim for exemption u/s 54F or this will be treated as business income. Can you Suggest a good and experienced CA who can file returns for me in my vicinity (Pune) Kindly provide your expert opinion in this regards.

asked Sep 19 '12 at 19:13 by Pankaj Patil 1135


It won't come under business income but would be long term capital gains only and section 54F would be applicable here.

There are some issues with section 54F applicability here.

As per section conditions, either possession for new residential house property should be received before last date of return filing for year in which sale occurred(31st Aug, 2012 for FY 2011-12 sales) or sale consideration amount should have been invested into capital gain scheme account. If you have already deposited all sale consideration amounts into this account then you fulfill this condition.

Another condition, possession for new property should be taken within two years from sale. So even if you had invested sale consideration for plots sold in 2009 and 2010 in capital gains scheme accounts in those years, exemption won't be available now and 20% income tax would be payable on gains from these sales.

There is one more condition for 54F applicability, which says that one should not be owning more than one residential house property at the time of sale of asset.

We are based in Gurgaon and have little idea about CAs in Pune, so won't be able to recommend anybody.

answered Sep 19 '12 at 23:46 by Pankaj Batra 5.2k320

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Asked: Sep 19 '12 at 19:13

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Last updated: Sep 19 '12 at 23:46