Section 54F(4) — the law in short
What the courts have decided on section 54F(4), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Humayun Suleman Merchant v CCIT
High CourtHelps departmentNo later treatment found
I never deposited the unspent sale proceeds in a capital gains account. Can I still claim 54F?
No, not for the unspent part. Section 54F(4) requires the amount not utilised towards the new house to be deposited in the notified account before the due date under section 139(1), and failure to do so confines the exemption to what was actually spent.
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CIT v K. Ramachandra Rao
High CourtHelps taxpayer
I put the whole sale consideration into building a house within the section 54F time limit but never opened a Capital Gains Account. Can the officer deny me the exemption on that ground alone?
No. The Karnataka High Court held that section 54F(4) is attracted only where the net consideration is not used to purchase or construct the house. If the assessee actually invests within the periods in section 54F(1), the deposit requirement never comes into play and exemption cannot be refused for want of a Capital Gains Account Scheme deposit. The Court also held there is no bar on constructing the new house on a site the assessee already owns; investments in that construction within one year before and three years after the transfer qualify. All four Revenue appeals were dismissed.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
