Date of Final Occupation of New Residential Property shall be taken as Date of Acquisition for claiming S. 54 Benefit: ITAT [Read Order]

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The Income Tax Appellate Tribunal ( ITAT ), Mumbai has held that the date of final occupation of the new residential property under consideration shall be taken as the date of acquisition of the same by the assessee for the purpose of determining the eligibility towards the claim of deduction from capital gain under Sec. 54 of the Income Tax Act.

In the instant case, the assessee’s claim for deduction under section 54 was denied by the Assessing Officer by holding that the assessee had entered into an ‘agreement to purchase’ the new residential property viz. A801, Lodha Luxuria on 29.01.2009. He was of the view that as the new residential property was purchased by the assessee beyond the stipulated period of one year before the transfer of the property under consideration, thus the said investment made by her was not eligible for claim of exemption under Sec.54.

Aggrieved by the order, the assessee carried the matter before the first appellate authority and thereafter to the Tribunal.

The Tribunal noted that though the assessee had entered into an agreement to purchase the new property viz. A-801, Lodha Luxuria on 29.01.2009, but then the possession of the same was delivered to her only as on 18.05.2012.

“We are persuaded to subscribe to the claim of the ld. A.R that the purchase of the new residential property would be substantially effected on the date when the assessee had paid the full consideration on the flat becoming ready for occupation and had obtained possession of the same. In the backdrop of our aforesaid observations, we are of the considered view that as the possession of the new residential property was delivered to the assessee on 18.05.2012 i.e. within a period of one year prior to the transfer of the property under consideration, thus the purchase of the same could safely be held to have been substantially effected on the said date.”

The Tribunal further relied on the decision of the Bombay High Court in the case of CIT Vs. Beena K. Jain wherein a similar issue was concluded in favor of the assessee.

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