Nexus between sale consideration and asset acquired for exemption

In Milan Sharad Ruparel V. Asst. CIT (2010) 5 ITR (Trib)570 (Mumbai) the assessee had chargeable long-term capital gain . Earlier, the assessee availed bank loan to acquire a residential house property. The capital gain exemption was claimed for the residential house so acquired previously by the assessee. The revenue negatived the claim of exemption.

The tribunal held that the house was acquired out of the bank loan availed and the sale proceeds were utilised for various other purposes. Obviously, the assessee did not have personal funds to acquire the said property for which exemption was claimed. Since the sale proceeds were not appropriated for acquiring the property, it was held that the assessee could not be granted exemption under section 54F of the Act in respect of the chargeable capital gain.