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Friday, April 29

COSTING & FM IMPORTANT by CAhelpers

ICAI always give DHAMAKA surprises in this paper.

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Costing::
1. Standard costing,
2. Marginal costing,
3. Material (EOQ, ROL, MAX, MIN & AVG level)
4. Operating costing (Transportation industry),
5. Process (Inter process profit, basic some with abnormal profit & loss)
6. Flexi-budget,
7. Key
limiting factor, JP/BP,
8.
Non integral a/c

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FM:
1. RATIO (Balance sheet, P&L A/c, application of formulas of ratio)
2. CAPITAL
BUDGETING (sum that include Taxation, whole chapter imp)
3. FUND FLOW,
4.
CAPITAL STRUCTURE
PLANNING (Cost of capital & capital structure planning)
5. Working capital management


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*THEORY*

COSTING & FM theory is very important in that FM is more imp as
costing theory u can answer
without having in-depth
knowldge
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FM: CFO, CAP STRUCTURE, W/ C mgt, VARIOUS SOURCES OF
FINANCE & basics., Financial tools
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COSTING: classification of
cost, VARIOUS UNITS OF
COSTING 4 VARIOUS
INDUSTRIES, cost centres,
MARGINAL & Basic.




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important chapters should be prepared very carefully. BUT DON'T GET DEPENDENT ON IMP BECAUSE WE CAN NEVER PREDICT ICAI. But We can say it may cover 65-75 marks.


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-Team CAhelpers


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send-
ON CA_GYANonSMS


to 09870807070


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SHARE IT ON YOUR WALL.

Wednesday, April 27

'Law, BC & Ethics' Important for PCC/IPCC

Importants by CAhelpers-

Company Law:
1. MoA/AoA,
2. Meetings
3. Introduction
4. MCA 21
5. Share capital 6. Membership/transfer/
transmission
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Business Laws:
almost all chptrs r equally
imp.
1. Nego (ambigous bill, HDC,
PAYING & COLLECTING BANKER,Properties n defn
of bill/chq/promisry note)
2.CONTRACT (Performanc
of
contract, Agency &
indemnity) 3.
all rest r equally
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Ethics- 1. CSR,
2. Corp. Govrnanc,
3.
Environmntal ethics
4. Working environment
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Communication: 1. Mean,
2. forms,
3. process,
4. group
dynamics,
5. Partnership & gift Deed (almost all deeds &
docs are equal imp),
6. notice 4
AGM
7. Minutes of AGM / BoD
Meeting *
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Again, its a Analysis on
basis of previous papers.
dont get dependent on Imp only. aftral nobdy can predict ICAI.


-Team CAhelpers

send-
ON CA_GYANonSMS
to 09870807070
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SHARE IT ON YOUR WALL
AND HELP YOUR FRIENDS.

Http://fb.Com/CAhelpers

Tuesday, April 26

Instrucions for Exams by ICAI

1. Immediately on receipt of
the Admit card, every
candidate is expected to
verify all the facts, i.e. Roll
No., Name, Group or
Groups or Unit, Examination Timing/
Session, Dates of
examination, Sequence of
Papers, Examination Centre
etc. In case of doubt he/
she is expected to approach the
Superintendent concerned
or the Additional Secretary
(Exams.), sufficiently in
advance. 2. The doors of the
examination halls will be
opened half an hour before
the time specified for the
commencement of the
examination in each session. All candidates
should be inside the
examination hall before
the scheduled time of the
commencement of the
examination. It may be noted that the
Superintendents have been
advised to verify the
identity of each candidate
at the time of his/her entry
into the examination hall. The admit card
downloaded from our
website which does not
bear the photograph of the
candidate is also a valid
admit card and the identity of a candidate will be
determined with the help
of the image of the
candidate and his specimen
signature on the
Attendance Register. Candidates are, however,
advised, in their own
interest, to carry with them
(along with the admit card
down-loaded from
website) the identity cards issued to them at the time
of their registration for
articles (erstwhile
Intermediate)/Professional
Education Course/
Professional Competence Course / Integrated
Professional Competence
Course by the Board of
Studies section of the
Decentralized Office or the
identity card issued to them by the Decentralized
Office at the time of their
registration as articled
clerks or (where
applicable) the identity
cards earlier issued by the Examination Department of
the Institute if the same are
still valid. 3. No candidate shall be
permitted to enter the hall
after the expiry of half an
hour after the distribution
of the question paper. No
candidate shall be permitted to leave the hall
until the expiry of one
hour after the distribution
of the question paper. 4. Candidates will find their
Roll Numbers written
against the seats allotted to
them. They should find and
occupy their allotted seats. 5. Immediately on receipt of
the question paper, every
candidate must write his/
her Roll Number on his/her
copy of the question paper
at the specified space provided on the cover
page. By reference to the
code of the question paper
displayed on the notice
board, every candidate is
expected to satisfy himself/herself that he/she
has received the correct
question paper. By
reference to the number of
printed pages and the
number of questions in the question paper which will
be found printed on the
front page, every
candidate is expected to
satisfy himself / herself
that the question paper issued to him/her is
complete. Similarly, if the
answer book supplied is
defective or the candidate
has inadvertently written
wrong Roll Number etc. or at wrong place, the answer
book should be exchanged
before the commencement
of examination. 6. No candidate shall bring
with him/her into the
examination hall or carry
on his/her person any
paper, book, notes or any
other material nor shall he/ she communicate with any
other candidate in the
examination hall or in the
premises, when the
examination is in progress.
Any infringement of this instruction is likely to
result in the candidate
concerned being expelled
from the examination hall
or otherwise dealt with. 7. Candidate should use all the
pages in the main answer
book/s supplied, before
asking for the additional
answer book/s. In order
to avoid wastage, candidates will be issued
additional answer books
only after they have used
the main answer book. No
candidate shall tear a leaf
of an answer book. The candidate should write
answers on both sides of
the paper. Rough work when necessary, should
be done on the left hand
side on the pages of the
answer book only.
Rough work should not
be done on the question paper. The candidates are advised, in their own
interest, to ensure that
working notes should
form part of the answer/s. 8. Statistical/Mathematical
tables to be provided
and graph paper,
wherever needed, for
solving the questions
are indicated on the question paper itself
and would be made
available to the
candidates on demand
by the Superintendent. 9 (a) The answers should be
written neatly and legibly
and should, as far as
possible, be brief. (b) The answer to each
question must be
commenced on a fresh
page and the question
number clearly and
prominently written at the top of each answer.
Candidates are advised in
their own interest not to
leave full page/s blank in
between the answers. (c) The answer to each
question in all parts should
be completed fully in one
page, or in a consecutive
set of pages before the
next question is taken up i.e. all parts of a question be
done together. 10. The candidates should
write the question
number and the sub -
question number, if
any, very clearly. The
Candidates should also leave a margin on each
page wherever margin
is not provided in the
answer book. 11. Candidates should not
tie up the unused
answer books along
with the used books.
Unused answer books
should be handed over to the invigilator. 12. The candidates are
required to provide
themselves with their own
pen, ink and blotting
paper. 13. The answer books should
be fastened together with
a tag supplied for the
purpose. Candidates may
bring their stapler and
staple them after tagging, if they so desire. The number
of answer books used
must be clearly stated in
the space provided on the
cover page. 14. Similarly, the number of
questions attempted
should also be indicated, by
way of a tick (P) mark against the question/s
attempted, in the cages
provided for the purpose
on the cover page. 15. The candidates should not
write anything in the
portion provided on the
cover page for noting the
marks. It is intended for
the use of the examiner. 16. No candidate shall,
without the special
permission of the
Superintendent/
Invigilator, leave his/
her seat in the examination hall during
the hours of the
examination. At the
expiry of the time
allowed for each paper,
the answer books must be surrendered
immediately to the
Invigilator concerned. 17. The Institute has extended
the facility of obtaining
confirmation , from the
Invigilator concerned for
the answer books
surrendered. Candidates may, therefore, obtain the
signature of the Invigilator
concerned , immediately on
submission of their answer
books, in the relevant
column on the back side of the Admit Card. In the case
of papers with two
sections , i.e. Sections 'A' &
'B' , signature of the
Invigilator may be
obtained against each section separately, after
surrendering the answer
books of each section. The
Superintendents have been
advised to issue receipt in
the aforesaid manner 'through the Invigilator',
for the answer books
surrendered. Candidates
should not leave the hall
without surrendering their
answer books to the Invigilator or the
Superintendent. 18. All the answer books
written by the
candidates should be
fastened together
before surrendering to
the Invigilator or the Superintendent of the
examination. Any
representation
regarding omission to
surrender the written
answer book or any part thereof which
tantamounts to
adoption of unfair
means will not be
entertained after the
examination is over. 19. The candidates should
write their Roll number
only in the space
provided on the cover
page of the main
answer book and in no other part of the
answer books. They
should not write Roll
Number in the
additional answer book
and graph paper.Writing of Roll
number in place/s other
than the space provided
for the purpose in the
cover page shall
tantamount to adoption of "unfair means".
Similarly, they should
not make any
distinguishing mark
including religious
symbols/prayers like God's name, Guru's
name, Om, Swastik, 786
etc. in any part of their
answer books .
Infringement of these
instructions is punishable, which may
include debarring from
appearing in the
examination. 20. Similarly, the
candidates are
prohibited from writing
their Articles
Registration Number,
Name, any extraneous notes, remarks, or
appeals in their answer
books and any violation
shall tantamount to
adoption of unfair
means. 21. Every candidate must
sign the attendance
sheets in the
appropriate column
against his/her Roll No.
and name and in no case shall leave the
examination hall
without signing these
sheets. 22. The candidates should not
write any matter on the
question paper (except
their Roll Number vide
instruction No.5) or on the
blotting paper. They should not remove any
paper or papers from the
examination hall (except
the question paper given
to them). 23. If a candidate is found to
have resorted to or has
made attempts to resort to
unfair means pertaining to
an examination, the Council
may, on receipt of a report to that effect and after
such investigation as it may
deem necessary, take such
disciplinary action against
the candidate concerned as
it may think fit.The Superintendent of the
examination has absolute
power to expell a
candidate from the
examination hall, if in his
opinion, the candidate has adopted or attempted to
adopt unfair means in
connection with the
examination. Any
candidate expelled from
the examination hall must, before leaving the hall,
submit to the Council his/
her explanation in writing
through the
Superintendent of the
examination. 24. Smoking, chewing of
tobacco/betel, intoxicant,
etc are strictly prohibited in
the examination hall. 25. Candidates should write
the answers only in blue or
blue black ink and in no
other colour. Though there
is no specific prohibition
against the use of ball point pen, it will be advisable to
use writing ink from the
point of view of legibility
and uniformity. Candidates
are also advised not to use
red, green ink, highlighter, sketch pen etc. for
underlining or highlighting
any sentence/para/phrase
as it amounts to making
distinguishing mark which
is prohibited as stated in para 19 above. Candidates are
permitted to use pencils
for drawing
graphs,diagrams etc.
However,Candidates
should take care not to use pencil for writing
answers. 26. In the PCE (Professional
Competence Examination),
IPCE (Integrated
Professional Competence
Examination) and Final
Examinations, the candidates have been
allowed to answer in Hindi
in all papers of a group or
both groups in entirety as
may be applicable and no
paper-wise option is allowed. The option once
exercised is final and
cannot be changed
subsequently. In the
absence of any clear
option, English Medium is reckoned as the medium of
answering in the
examination. The question
papers, however, will be in
English except the
following papers which will be in English with Hindi
translation: PCE (Professional
Competence
Examination) Group I - Paper 2 - Auditing and
Assurance
Paper 3 - Business and
Corporate Laws Group II- Paper 4 -Cost Accounting
and Financial Management
Paper 6 - Information
Technology and Strategic
Management IPCE (Integrated
Professional
Competence
Examination) Group I - Paper 2 - Business Laws,
Ethics and Communication
Paper 3 - Cost Accounting
and Financial Management Group II- Paper 6 - Auditing and
Assurance
Paper 7 - Information
Technology and Strategic
Management Candidates opting for
Hindi Medium i) All questions, including
parts, if any, in all the
papers have to be
answered in Hindi medium
only. However, candidates
can write number, technical terms, phrases, and figures
in English and can also
solve numerical questions
in English. ii) Candidates who opt for
Hindi medium and answer
any or all questions in
English medium (except
numerical questions) will
not get any credit for such question/s and zero will be
awarded. Candidates opting for
English Medium i) All questions including
parts, if any, in all the
papers have to be
answered in English
medium only. ii) Candidates who opt for
English medium and
answer any or all questions
in Hindi medium will not get
any credit for such
question/s and zero will be awarded. 27. Students are allowed to
use battery operated
portable calculators in
all the subjects. The
calculators can be of
any type with upto 6 functions,12 digits and
upto two memories.
(Attempt to use any
other type of
calculators not
complying with the specifications indicated
above or having more
features than
mentioned above shall
tantamount to use of
"unfair means" and would fall within the
purview of paragraph
23 stated above.) Note 1. Printing models of
calculators are not allowed. 2. Exchange of calculators
between the students is
not permitted. 3. The calculators should be
noiseless and cordless. 4. The Superintendent of the
examination has complete
authority to disallow the
use of a particular
calculator not complying
with the conditions stated above . (It may be noted
that each step/working of
any problem should
invariably be indicated by
the candidate in the
answer book, irrespective of use of calculator.
Candidates are advised to
follow this instruction in
their own interest.) 5. Scientific calculators are not
allowed. 28. Candidates are advised not
to bring the pager, cellular
phone, digital diary or
other electronic gadgets
inside the examination hall
except the calculator as defined in para 27 above. Violation of these
instructions shall
tantamount to adoption
of unfair means and the
candidates will be liable
for punishment which may include debarring
from appearing in the
examination. 29. Candidate should answer
all questions of a paper in
one set of answer books
except in the following
papers which have two
sections each and which are to be answered in
different answer books. Professional Competence
Examination : Paper-6 Section A - Information Technology * Section B - Strategic Management * Integrated Professional
Competence Examination : Paper-7 Section A - Information Technology * Section B - Strategic Management * * Each section is to be
answered in separate set
of answer books.
The answer books of
sections A and B
respectively will bear rubber stamp impressions
A and B and candidates are
expected to answer in
correct set of answer
books. The Council and the
examiners do not undertake to examine
answers written in wrong
set of answer books. Each candidate is
advised to familiarise
himself/herself with
the location of the
examination centre by
visiting the centre a day prior to the
commencement of the
examinations and to
also satisfy that he/she
has visited/seen the
allotted centre. MOBILE PHONES ARE
BANNED IN THE
EXAMINATION CENTRES.

ICAI prepares draft accounting standards for political parties

Accounting regulator
Institute of Chartered
Accountants of India today
said it has prepared draft
accounting standards for political parties on a
request from the Election
Commission. "The council
has approved uniform
financial statement and
accounting and auditing framework for political
parties," said ICAI
President G Ramaswamy.
"We are going to present it
to the Election
Commission," he said. Once the Election Commission
approves it, the new
accounting standard would
be applicable to all political
parties registered in India.
ICAI will shortly submit its draft framework to the
Election Commission, which
will notify the guidelines.
The accounting framework
would include disclosures
like gift in form of kind, he said, adding, the
contribution of individual
and corporates would be
part of the new system.
The proposed norms
would to ensure accountability, financial
discipline and proper
utilisation of funds by
political parties.

Courtsey : IBNlive

Monday, April 25

Verification Status November - 2010 Examinations - (25-04-2011)

Friday, April 22

Provision of 15-minutes reading and planning time allowance to the candidates of Chartered Accountants Examinations (Effective from May-2011 CA Examinations)

The Council of the Institute, based on the recommendation of the Examination Committee has
decided to allow 15- minute reading and planning time allowance to the candidates in the Chartered Accountants Examinations before the scheduled commencement of the examinations i.e, if the examination commences from 2.00 PM, then the candidates will be given Question Papers at 1.45 PM. This reading time will not be available for CPT and all post qualification Courses Examinations. The objective of providing question paper 15 minutes before the scheduled time is to:
(i) Enable the candidates to read the question paper thoroughly (without encroaching on the examination duration) and
(ii) Chalk out the strategy to answer the questions. Candidates are required to note the following in this regard:
(1) The candidates will not be allowed to leave the Examination Hall under any circumstances from 1.45 PM
to 3.00 PM.
(2) The candidates shall be allowed to enter the hall from 1.30 PM upto 2.30 PM only. Any breach of the above requirements would be treated as adopting Unfair Means by the students concerned and applicable disciplinary action would be taken on such erring students. ( G. Somasekhar)

Source: http://goo.gl/LR9DH

(ICAI LINK)

Wednesday, April 20

Importants for A/c group1 by CAhelpers

A/c Group I =>
Importants (xclusiv CAhelpers'imp)-

-HIRE PURCHASE(stock&debtors method,low value goods)
-Amalgamation(whole chapter)
-Not 4 profit entities(preparing I&E a/c & B/s)
-Single entry(very Imp)
-Cash flow(direct)
-Partnership(entry,retirement & death)
-Fire claim(7 steps' sum)
-Alteration of capital (cap. Reduction,ESOP, etc.)
-Investment(valuation & a/cing)
-AS(very imp., we will provide u in few days)

*the list will include some more topics, topics abov givn wil nt b removd but some topics may b included*

*stay connected with us*


-Team CAhelpers

Friday, April 1

Section 54, 54F – Landmark Decisions & Circulars

Section 54, 54F – Landmark Decisions & Circulars
By Anshul Mandowara

Sec 54 – Profit on Sale of Property used for Residence
In case of an assessee being an Individual or a HUF, the capital gains arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property",  and the assessee has within a period of one year before or two year after the date on which the transfer took place purchased a residential house, or constructs a residential house within a period of three years after the date of transfer by investing capital gain, then such capital gain will be exempt.
This section deals with giving exemption when long term capital gains arises on transfer of residential house is invested in purchase or construction of another residential house-
1.)    If amount of capital gains is greater than the cost of house purchased or constructed, the difference will be taxable in the year of transfer.
If the new property is transferred within three years, value of this property shall be considered to be NIL.
2.)    If the cost of new asset is equal or more than the capital gains, no capital gain tax shall be chargeable.
If the new asset is transferred within three years, the cost shall be reduced by the amount of capital gain.
EXAMPLE:-
Mr. Shah transferred his house and earned capital gain of Rs. 2,00,000/- and purchased a new house for Rs. 2,50,000/-. If this property is transferred within three years value of this property shall be taken at Rs. 50,000/- and out of sale consideration Rs. 50,000/- shall be deducted and the difference shall be charged as short term capital gain.
3.)    If the amount of capital gains is not utilized for purchase of the new asset, within one year before the date of transfer of original asset took place, or which is not utilized by him for the purchase or construction of new asset before the date of furnishing of return the same is required to be deposited in the bank or institution as may be specified by the Central Government and the proof of deposit is required to be attached with the return of Income.
Cost of Property shall be considered to be, amount spent for purchase or construction of the property plus amount deposited in Bank.


NOTE:
As per Section 54 amount of Capital Gains is required to be invested for purchase or construction of the property.

Section 54F – Capital Gains invested in Residential House:
If long term capital asset, other than residential house is transferred and the assessee makes investment of a residential house, within the stipulated period, the capital gain shall be exempted.
Conditions:
1.)    The exemption is available to Individual and HUF.
2.)    Investment in residential house should be of net consideration.
3.)    If a house is purchased before one year or after two years of transfer or if house is constructed, it should be constructed within three years from the date of transfer of original asset.
4.)    Cost of new asset is more than amount of net consideration and if the cost of new asset is less than amount of net consideration, than proportionate exemption shall be available.
5.)    This exemption is available, if the assessee is not in possession of any residential house on the date of sale of other asset (amendment in this condition from A.Y. 2001-2002)
From A Y 2001-2002, the assessee shall be entitled to exemption even if the assessee owns one residential house other than the new asset.
6.)    New asset purchased or constructed should not be transferred for three years.
7.)    If amount of net consideration is not utilized for purchase or construction of new house, it should be deposited in the scheme notified by central government before the due date of filing the return u/s 139(1) and proof of such payment should be enclosed with the return of income.
8.)    Amount spent for new asset as well as amount deposited in bank shall be considered as cost of acquisition of new asset
9.)    After acquiring a new residential house it is possible assessee may become owner of two residential house now proviso provide that there after you cannot purchase any new residential house nor you can construct with in a period of three years otherwise the exemption will be withdrawn.




Section 54 vs. Section 54F

1.)    Both sections are applicable to individual and HUF.

2.)    Applicable only when long term capital asset is sold.

3.)    Sec 54 applies to a long term capital asset being buildings or lands appurtenant thereto and being residential house.

4.)    The exemption is available if the assessee purchases or constructs a residential house within a specified period.

5.)    Under section 54 only ‘Capital Gains’ should be invested in residential house while under section 54F ‘net consideration’ should be invested.

6.)    Section 54 is applicable, even if, assessee holds more than one house property, while section 54F is applicable only if the assessee has one residential house at the date of transfer of old asset.

7.)    If capital gain or net consideration is not appropriated or utilized before the due date of filing the return of income under section 139(1) then the same shall be deposited under ‘Capital Gains Accounts Scheme, 1988’.


















Landmark Judgments:


1.      Beneficial owner is owner for Sec. 54.

Mrs. Amy F. Cama v CIT  237 ITR 82 (Bom)
Representative Assessee – Trustee – Assessment of Trustee – Effect of Section 161 – Trustee entitled to benefits available to beneficiary – Trustee can claim exemption under section 54 – Income Tax Act, 1961, S.54, 161
           Capital Gains – Exemption – Sale of House used as residence and purchase of another house for purpose of residence – Exemption under section 54 can be claimed – Income Tax Act, 1961, S. 54, 161.

2.      Agreement for purchase of a house with builder or society amounts to construction.

CIT v Smt. Bharati C Kothari 244 ITR 352 (Cal)
Capital Gains – Exemption – Sale of residential house and construction of another within three years – Sale of flat by assessee on 30-04-1981 – Agreement for purchase of a new flat on 29-04-1982 – Amount paid in Installments – Entire purchase price paid within three years from date of Sale of flat – Sale proceeds invested in flat under construction – Whether assessee herself constructs house or gets it constructed by a contractor or third party was not material – Assessee was entitled to exemption from capital gains tax – Income Tax Act, 1961, S. 54.

3.      Sec. 54 has to be liberally interpreted.

Bajaj Tempo Ltd. v CIT 196 ITR 188 (SC)
The Hon’ble Supreme Court in the cases of Bajaj Tempo Ltd. (1992) 196 ITR 188 has held that if there are two interpretations possible, the interpretation, which is harmonious with the object of the statute to effectuate the legislative intention and in consonance with the justice, a purposive approach should be adopted. So the provision for deduction, exemption or relief should be construed reasonably and in favour of the assessee.

4.      House of the firm used by partners :

CIT v M. K. Chandrakanth (2002) 258 ITR 14 (Mad)
Where a firms property is used for residence of partners and thereafter distributed to the partners upon dissolution of the firm and the partners sells the same, exemption can be claimed by the partner under section 54. For this purpose, period for which this property was held by the firm shall also be taken into account for determining the question whether the house property in exemption was a long term capital asset or not.
5.      Whether when assessee constructs or purchases a residential house out of borrowed funds is he eligible for deduction u/s. 54/54F of the Income Tax Act, 1961?

                  It is submitted that section 54F(1) should be read along with its sub-section (4) and not in isolation. If both the sections are read together, only one inference can be drawn that the sale proceeds of the capital asset must be utilized/appropriated by the assessee towards the new assets within a specified period, and if not appropriated before date of furnishing of return of income under section 139, it shall be deposited by him before furnishing such returns in an account of any such bank or institution as may be specified and utilized in accordance with any scheme which the central government may by notification in the official gazette framed in this behalf. If the sale proceeds is appropriated for any other purpose, except to purchase the property and new assets are acquired out of the borrowings, the assessee would not be entitled for deduction under Section 54F of the Act. In the case of Milan Sharad Ruparel v ACIT (Mum.) 27 SOT 61 sale proceeds of the capital assets received by the assessee were utilized and appropriated for different purpose and the assessee had no personal funds to acquire a residential house which was purchased from the loan borrowed from Bank. In such circumstances, since the sale proceeds or the capital gain accrued to the assessee had not been wholly appropriated towards the purchase of the residential house within a specified period, the assessee is not entitled to claim exemption of whole capital gain under section 54F.

                  The objects of introduction of these sections are that assessee should make investments in a residential house, on sale of its old residential house. It is not necessary that the same fund should be available with the assessee for its investment in a residential house. Neither the law nor does any circular require the identity of amount received on sale and utilization for purpose of section 54F and other relevant provisions. This view is fortified by judgment of the Kerala High Court in the case of K.C. Gopalan 107 Taxmann 591 (Kerala) in which there Lordship have held that in order to get benefit of section 54, there is no condition, that assessee should utilize the sale consideration itself for the purpose of acquisition of new property.

                  It is submitted that exemption u/s. 54/54F of the I.T. Act should be liberally interpreted. The Supreme Court of India in the case of Bajaj Tempo has clearly held that the exemption u/s. 54/54F of the Act should be liberally construed and if there are two view possible, the one which is favourable to the assessee should be adopted. It is submitted that when investment in the new house is made within the prescribed time limit, the basic objective of granting the exemption is satisfied & there is no need to track down the source.




6.      CIT v T.N. Aravinda Reddy (1979) 120 ITR 46 (SC)
          
Where a property is owned by more than one person and the other co-owner or co-owners release his or their respective share or interest in the property in favour of one of the co-owners, it can be said that the property has been purchased by the releasee. Such release also fulfills the condition of section 54 as to purchase so far as releasee-assessee is concerned.

7.      CIT v Narasimhan (PV) (1990) 181 ITR 101 (Mad)
          
The assessee sold his residential property and invested the capital gain within the stipulated time in the construction of a new floor on another house owned by him by demolishing the existing floor, it was held that he was entitled to exemption under section 54.

8.      K.C. Kaushik v P.B. Rane, ITO  (1990) 185 ITR 499 (Bom)

Where the assessee purchased more than one house, than he can claim relief in respect of only one house provided he satisfies the conditions of section 54.

However, in the following three tribunal judgments, the exemption was given for more than one house/flats-

(1)   Where the assessee had purchased two adjacent residential units having a different municipal number but used as one single residential house. [Anand Basappa (Dr.) v ITO (2004) 91 ITD 53 (Bang-Trib)].

(2)   Where the assesee had purchased four flats in the same building though on different floors and since all the flats were required because of large size of the family, which maintained a common kitchen and a common ration card. [Vyas (K.G.) v 7th ITO (1986) 16 ITD 195 (Bom)].

(3)   Where an assessee purchased two adjoining flats converting into a single residence, exemption under section 54 shall be allowed. [ACIT v Mrs. Leela P. Nanda (2006) 286 ITR (AT) 113 (Mumbai)].

However, in a recent case it has been held that the expression ‘a’ residential house  should be understood in a sense that building should be of residential nature and ‘a’ should not be understood to indicate a singular number. The combined reading of section 54(1) and 54F of the Income-tax Act discloses that, a non-residential building can be sold, the capital gain of which can be invested in a residential building to seek exemption of capital gain tax. However, the proviso to section 54F of the Income-tax Act, lays down that if the assessee has already one residential building, he is not entitled to exemption of capital gains tax, when he invests the capital gain in purchase of additional residential building. [CIT v D. Ananda Basappa (2009) 309 ITR 329 (Karn)]. However, in case of section 54F, the law specifically prohibits the purchase or construction of more than one residential house.

9.      Sashi Varma v CIT (1997) 224 ITR 106 (MP)

Allotment of a flat by DDA under the self-financing scheme shall be treated as construction of the house [Circular No. 471, dated 15-10-1986]. Similarly, allotment of a flat or house by a cooperative house, of which the assesee is the member, is also treated as construction of the house [Circular No. 672, dated 16-12-1993]. Further, in the cases, the assessee shall be entitled to claim exemption in respect of capital gains even though the construction is not completed within the statutory time limit.

Delhi High Court applied the same analogy where the assessee made substantial  payment within the prescribed time and thus  acquired substantial domain over the  property, although the builder failed to hand over the possession within the stipulated period. [CIT v R.L. Sood (2000) 245 ITR 727 (Del)].

10.  Ramanathan (CV) v CIT (1980) 155 ITR 191 (Mad)

In case of assessee’s death during the stipulated period, benefit of exemption under section 54(1) is available to legal representative if the required condition are satisfied by the legal representative.

11.  CIT v Smt. Sunita Aggarwal (2006) 284 ITR 20 (Del)

Where for the purpose of claiming exemption under section 54, the assessee purchased property from two different persons, by virtue of four different sale instances in the shape of four different parcels which constituted one single residential unit or house, it was held that the execution of four different sale deeds in respect of four different portions of the property does not materially affect the nature of transaction or nature of the  property acquired, the investment so made in the purchase  of the same was eligible for deduction under section 54.

12.  CIT v V. Natarajan (2006) 154 Taxman 399 (Mad)

Where an assessee who owned a house property, sold the same and purchased another property in the name of his wife, exemption under section 54 shall be allowable.

Further, where the assessee sold agricultural land and out of sale proceeds, purchased another agricultural land in his name and in the name of his only son, exemption under section 54B was allowable.

13.  T.N. Vasavan v CIT (1992) 197 ITR 163 (Ker)

An assessee gifted some land to his wife. He thereafter constructed a building on the said land. The Government acquired the land and building and paid compensation for land to wife and for building to the assessee (husband). It was held that capital gain on land was assessable in the husband by virtue of section 64 but he was not entitled to exemption under section 54 in respect of capital gain on the acquisition of the land of the wife as the capital gain to the wife did not arise on transfer of a residential house.

14.  Mrs. Prema P. shah, Sanjiv P. Shah v ITO (2006) 282 ITR (AT) 211 (Mumbai)

Where non-resident Indian sold property in India and purchased residential property in U.K. and claimed deduction under section 54, it was held that it was not necessary that residential property showed be purchased in India itself.

However, exemption under section 54F was not allowed where asset other than residential house property was transferred and the assessee acquired a residential house outside India.

15.  Shakuntala Devi v DDIT 2009-TIOL_221 ITAT-BANG

Where an assessee after selling the flat has entered into a memorandum of understanding with the buyer of the property and transfers a substantial part of the total consideration and consequently claims exemption under section 54, the Bangalore Tribunal held that for claiming exemption under section 54, transfers of property, possession or ownership has nothing to do with the case as long as the sum of capital gains stands transferred to the seller for the purchase of a new flat as this fulfills the condition of section 54.

Similarly, the assessee shall be allowed exemption under section 54 even if the house property is not completed within the statutory time limit. [Sashi Varma v CIT (1997) 224 ITR 106 (MP)]. Delhi High Court applied the same analogy where the assessee made substantial payment within the prescribed time and thus acquired substantial domain over the property, although the builder failed to hand over the possession within the stipulated period. [CIT v R.L. Sood (2000) 245 ITR 727 (Del)].

16.  Circular No. 667, dated 18-10-1993

The cost of the land is an integral part of the cost of the residential house, whether purchased or constructed.