Capital Gain Exemption u/s 54 Allowable Even If Sale was Completed After Purchase of New Property: ITAT [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption under Section 54 of the Income Tax Act 1961 would be allowed even if the sale was completed after purchase of new property.

 The assessee, Anik Chatterjee filed the return of income on 13.07.2016 and during the course of assessment proceedings , the Assessing Officer(AO) noted that the assessee had claimed deduction under Section  54 of the Income Tax Act, 1961. The date of purchase of property was 08.08.2014 and the date of sale of property was 03.08.2015.The assessee had made payments for booking on 10.06.2014 of Rs .10 lacs and 19.06.2014 of Rs.15 lacs . The remaining payments were made up to 04.11.2014. 

Section 54 of the Income Tax Act 1961, gives relief to the taxpayer who sells his residential house from the sale proceeds he acquires another residential house. It deals with the exemption on sale of long-term capital gains. Section 54F reads as under: “Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.

Renu Suri, on behalf of the assessee contended that the Assessing officer (AO) had erred in not considering the Payment made for the Purchase of the new property which was an exemption under 54 of the Income Tax Act 1961

Kanav Bali appeared for the revenue.

 The Delhi Bench of B. R. R. Kumar, (Accountant Member) and Yogesh Kumar US (Judicial Member) observed that the agreement for sale was signed on 08.08.2014 and the payments were completed by 08.10.2014 and  the amount equivalent to the capital gains had been utilised for acquisition of a new house. The Bench allowed the appeal and permitted the assessee to avail the benefit under Section  54 of the Act. 

To Read the full text of the Order CLICK HERE

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