As per Section 54 of the Income Tax Act, 1961 the capital gain 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” shall be exempt to the extent such capital gain is invested in the purchase of another residential HP and according to section 54F, any long-term capital gain, arising to an individual or HUF, from the transfer of any capital assets, other than residential house property, shall be exempt in full, if the entire net sales consideration is invested in purchase of one residential house.

Nowhere it has been mentioned in sec 54 and sec 54F that the same funds must be utilized for the purchase or construction of new residential house; requirement of law is that the assessee should purchase residential house within the specified period and the source of funds is quiet irrelevant.

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