1. Section 54 of the Income Tax Act provides an exemption on capital gains from the sale of a residential property if the proceeds are reinvested in another residential property within a specified time frame.
2. Exemption under Section 54 of the Income Tax Act available only to individuals and Hindu Undivided Families (HUFs), not firms or other entities.
3. If a house owned by a firm is used by partners for residential purposes, the firm itself cannot claim the exemption under Section 54 because it's a separate legal entity.
4. However, if the firm dissolves and partners individually sell their shares of the property, they may be eligible to claim the exemption for their respective capital gains by reinvesting in another residential property.
5. Each partner would be treated as an individual taxpayer for claiming this exemption.
Can the exemption under section 54 be claimed if a firm-owned house that partners use for residential purposes is sold?
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