2008 (6) TMI 199 - HC - Income Tax

Capital Gains Exemption u/s 54F - Construction of a house only qualifies for exemption on the investment. Even addition of a floor of a self-contained type to the existing house would have qualified for exemption. However, since the assessee has only made addition to the plinth area, which is in the form of modification of an existing house, she is not entitled to deduction claimed under section 54F of the Act.

Summary

The Kerala High Court ruled that in the computation of long-term capital gains, deduction under section 54F of the Income Tax Act is not available for investment in modification or renovation of an existing residential house. The appellant's addition of plinth area did not qualify for exemption as it was considered a modification, not construction of a new house. The court upheld the Tribunal's decision and dismissed the appeal.