I have started construction on my plot in May’2010 and spend Rs.450000.00 approx. upto March’2011 meanwhile LTCG of Rs.1200000.00 arises in April’2011 on sale one house property.
My question is whether i can claim cost of construction Rs.450000.00 of before sale proceeds of old house from my total LTCG u/s54 or not?


Admin’s Response:

Section 54 speaks of “purchase of asset” before one year and not ‘construction’. Since you have spent the amount on construction, it is not possible to claim u/s 54. You may now invest under section 54 EC spent on construction after April 2011 to save on capital gain tax.