Yes, you can claim exemption by investing the amount of capital gain on construction of a floor in the house. Provided that long term capital gain arises from the sale of any residential house only and the amount of capital gain is invested in the purchase of another residential house. Construction of a floor in the house shall be deemed to be invested in the purchase of a new residential house.
House Property exemption, U/s 54, Home loan Explained about the exemption process for a floor in house property.
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