Investment in residential house property to claim exemption from capital arising out of sale of residential house property - Scope of Section 54F

Section 54F of Income Tax Act, 1961

In the matter of MRS. MEERA JACOB Versus INCOME-TAX OFFICER [2009 -TMI - 34032 - KERALA HIGH COURT], high court observed that:

Section 54F does not provide for exemption on investment in renovation or modification of an existing house. On the other hand, 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.