Exemption of residential house property
Flats allotted under SFS schemes of DDA - For the purpose of capital gains tax the cost of the new asset is the tentative cost of construction and the fact that the amount was allowed to be paid in instalments does not affect the legal position. Therefore, cases of allotment of flats under the Self-Financing Scheme of the D.D.A. shall be treated as cases of construction for the purpose of capital gains.—Circular : No. 471 [F. No. 207/27/85-IT(A-II)], dated 15-10-1986.
Construction, connotation of - Allotment of flats/houses by co-operative societies and other institutions, whose schemes of allotment and construction, are similar to those of DDA (see Circular No. 471), should be treated as cases of construction—Circular : No. 672, dated 16-12-1993.
Capital gain account scheme - In cases, where the due date of furnishing the return of income is 30th of June and the taxpayer makes the deposit under Capital Gains Account Scheme and furnishes the return of income by 31st July, 1988 no penalty and interest should be levied and the deposit itself will be treated as having been made in time and the concession in respect of tax on capital gains will be allowed - Circular : No. 520, dated 11-8-1988.
The unutilised deposit amount under the Capital Gains Account Scheme, 1988 in the case of an individual who dies before the expiry of the stipulated period cannot be taxed in the hands of the deceased. This amount is not taxable in the hands of legal heirs also as the unutilised portion of the deposit does not partake the character of income in their hands but is only a part of the estate devolving upon them—Circular : No. 743, dated 6-5-1996.
Applicability to self-occupied house - Income of a self-occupied residential house is chargeable under the head ‘Income from house property’, even though in certain circumstances such income may be computed at nil or at a negative figure by virtue of section 23(2) read with section 24 of the Act. Thus, a person is entitled to claim exemption under section 54 of the Act even in respect of a self-occupied residential house—Circular : No. 538, dated 13-7-1989.
Purchase of plot, followed by construction - If the amount of capital gain for the purposes of section 54, and the net consideration for the purposes of section 54F, is appropriated towards purchase of a plot and also towards construction of a residential house thereon, the aggregate cost should be considered for determining the quantum of deduction under section 54/54F, provided that the acquisition of plot and also the construction thereon, are completed within the period specified in these sections—Circular : No. 667, dated 18-10-1993.