Date of allotment is paramount for considering deduction under section 54, and possession of property has, ipso facto, no effect on claim of deduction under section 54. Deduction under section 54 is allowable in respect of an investment made in booking of a flat under construction one year before the date of transfer of the original asset, even though the scheduled date of completion of the flat booked was beyond three years from the date of transfer of the original asset.

8. [2026] 184 taxmann.com 429 (Mumbai - Trib.)

Arvinder Singh Sahni v. DCIT

A.Y.: 2015-16 Date of Order: 12.3.2026

Section : 54

Date of allotment is paramount for considering deduction under section 54, and possession of property has, ipso facto, no effect on claim of deduction under section 54. Deduction under section 54 is allowable in respect of an investment made in booking of a flat under construction one year before the date of transfer of the original asset, even though the scheduled date of completion of the flat booked was beyond three years from the date of transfer of the original asset.

FACTS

During the assessment year under consideration, the assessee earned long-term capital gains of ₹2.31 crore upon the sale of a residential house purchased by him in 2011. The house giving rise to long-term capital gain (original asset) was sold on 19.12.2014. The long-term capital gains arising on transfer of the original asset were claimed to be exempt on the ground that the assessee had, on 31.10.2014, booked a new residential house. The booking being within a period of one year prior to the date of transfer of the original