Can you claim exemption for two separate years for Investment in same House?

Q. I have been allotted shares of a US company under ESOP scheme in 1998. These shares are not listed abroad. I have sold some of these shares in FY 06-07 and invested the consideration in a residential property. I availed the exemption u/s 54F to the extent of amount paid to the builders in that FY. In the FY 07-08, I sold further shares. Can I avail the exemption u/s 54F for the FY 07-08 for the same property towards the balance amount payable to the builder. Please advice. The option was provided to me in the July 1998. The shares were vested within 6 months from the date of option Please advice.

Ans. Before I express my opinion, let us see what the exemption provision says u/s 54 F of the I.T Act. The conditions for claim of exemption u/s 54F are
a) The gain should be long term.

b) The asset sold should be other than a residential house.

c) The investment should be for buying or constructing a residential house.

d) The investment should be within one year before
or two years after the sale of asset on which long term gain has

e) There should not be more than one residential house in the name of
assessee at the time of purchase or construction of new house.

If assessee fulfills all the above stated conditions, he/she will get exemption u/s 54F of the I.T Act.

It is clear that the condition of "one year before" can be fulfilled by an assessee for long term gains arising in consecuitive two years. There is nothing expressly written in the I.T Act, that such LTCG of two years can not be claimed for same house. The condition is LTCG should be utilised for purchase of residential house.

In your specific case , ESOP share is long term capital asset as they were held for more than one year and the gain on sale of those shares were utilised for same residence purchase . If you invest within time limit , you are certainly eligible for claim of exemption u/s 54F of the I T Act.


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