House on sale

A person has three residential houses and he purchased another residential house in financial year 2011-12. Subsequently, he sells two of the earlier houses in the same year. Will he be eligible to get the benefit under Section 54 of the Income Tax Act on capital gains on sale of the two houses?

Vikas Surana, Calcutta

Section 54 of the Income Tax Act does not restrict the exemption of capital gains tax for one house only. Subject to the fulfilment of the time limit criteria, you can claim benefit with respect to more than one house. There are favourable decisions of the court on this issue. The Income Tax Tribunal, Mumbai in the case of Rajesh Keshav Pillai versus ITO [2011] 44 SOT 617 held that if there was the sale of more than one residential houses, the exemption will be available in relation to each set of sale and the corresponding investment in the residential house. The assessee (Rajesh Keshav Pillai) owned two flats in Shikha Building, Pali Hill, Bandra (West). Both the flats had been purchased on January 5, 2001. The assessee sold one flat on June 16, 2005, for a sum of Rs 1.01 crore and the second flat on April 29, 2005 for a sum of Rs 97.79 lakh. The tribunal held that it was in full agreement with the decision of the Special Bench that exemption on the sale of a residential house would be available only when there was corresponding investment in one residential house. In case there is sale of more than one residential house, the exemption will be available in relation to each set of sale and corresponding investment in the residential house. However, the exemption will not be available on the aggregate of capital gain and aggregate of investment in residential houses.

I have some accounts in the Senior Citizen Saving Scheme with the State Bank of India. Is there any provision for getting short-term loan against those SCSS accounts as security from the bank?

Asit Saha, Nalhati

No, you cannot get any bank loan against deposits in SCSS accounts. The scheme doesn't allow for any such loan facility.

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