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| The Tax Publishers2019 TaxPub(DT) 3756 (Del-Trib) : (2019) 177 ITD 0370 : (2019) 201 TTJ 0018 : (2019) 072 ITR (Trib) 0546 INCOME TAX ACT, 1961
Section 54
Where the assessee booked a flat with builder in the year 2006 but the construction of same got completed in the year 2013, then for the purposes of section 54 the date of completion of construction was relevant and hence deduction under section 54 cannot be denied in respect of capital gain arising from transfer of property in the year 2011.
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Capital gains - Deduction under section 54 - Booking of flat with builder - Flat booked in year 2006 but completed in 2013
The assessee declared long term capital from the sale of property on 28-12-2011 on which he claimed deduction under section 54. However, the AO disallowed the claim on the grounds that the assessee had entered into an agreement dated 10-2-2006 and therefore, the date of agreement be treated as the date of acquisition, which fell beyond the period of one year prior to the date of transfer prescribed under section 54 of the Income Tax Act, owing the judgment of the Delhi High Court in the case of Gulshan Malik v. CIT in ITA No. 55 of 2014 and CIT v. R.L. Sood 2000 TaxPub(DT) 875 (Del-HC) : (2000) 245 ITR 727 (Del) he disallowed the claim of the assessee. According to AO, the assessee could have purchased a house property between 28-12-2010 to 28-10-2011 in order to claim deduction under section 54. Since the assessee invested in the residential House property namely DLF Magnolia way back in financial year 2005-06 which was clearly outside the time period mentioned in section 54 of the Income Tax Act, it does not fit in case of exemption under section 54 of the Act. Held: Since the assessee entered into an agreement for construction of a bare shell of a house by periodic payment of installments and he had to carry the internal fit-outs to make it liveable as per agreement with the Builder Company, within Six months from the date of certificate of occupation from the competent Authorities, this is to be treated as the case of construction. Further, the construction has been completed within three years of the sale of original asset, the relief under section 54 was genuinely claimed by assessee and therefore, disallowance made under section 54 needs to be deleted. It was clear that the facts of the present case that it was a case of construction of flat and not purchase of flat as held by the AO. Since, the case pertained to construction, benefit of section 54 was available to assessee. In view of above, the booking of bare shell of a flat is a construction of house property and not purchase, therefore, the date of completion of construction is to be looked into which is as per provision of section 54.
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