April 2019

Section 54 Purchase of residential property is said to have been substantially effected on the date of possession. Accordingly, where assessee had received possession of a residential house one year before the date of transfer of residential house, though the agreement to purchase was entered into much prior thereto, the assessee was held to be eligible to claim deduction u/s. 54.

Jagdish D. Shah | Jagdish T. Punjabi
Chartered Accountants

1. Ranjana R. Deshmukh vs. ITO (Mumbai) Members : Shamim Yahya,  AM and Ravish Sood, JM ITA No.: 697/Mum./2017 A.Y.: 2013-14 Dated: 9th November, 2018. Counsel for assessee / revenue: Moti B. Totlani / Chaitanya Anjaria

 

Section 54   Purchase of residential property is said to have been substantially effected on the date of possession.  Accordingly, where assessee had received possession of a residential house one year before the date of transfer of residential house, though the agreement to purchase was entered into much prior thereto, the assessee was held to be eligible to claim deduction u/s. 54.

 

FACTS

The assessee, an individual, sold immovable property on 28th March, 2013 and claimed exemption u/s. 54 on the resultant gains. During the course of assessment, the Assessing Officer (AO) observed that the property in respect of which exemption was claimed by the assessee was purchased on 29th January, 2009 by entering into an agreement to purchase. The AO therefore concluded that since the residential property purchased by the assessee was beyond the stipulated period of one year before the transfer of property under consideration and hence the assessee was not entitled to claim exemption u/s. 54 of the Act.

 

Aggrieved, the assessee preferred an appeal to the CIT(A) who upheld the action of the AO.

 

Aggrieved, the assessee preferred an appeal to the Tribunal.

 

HELD

The Tribunal observed that possession of the residential property purchased by the asssessee was handed over to the assessee 18th May, 2012 which was within the prescribed period of one year prior to the date of transfer of property under consideration and therefore the assessee was entitled t

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