Purchase of semi-finished flat to be treated as purchase of property for construction for sec. 54 claim : ITAT Delhi

Akshay Sobti v. ACIT – [2019] 106 taxmann.com 60 (Delhi – Trib.)

Assessee sold a residential property and invested sale consideration for booking a semi-finished residential flat from a builder. He claimed exemption under section 54.

Assessing Officer (AO) disallowed the exemption on grounds that assessee had purchased new property beyond period of one year prior to date of transfer prescribed under section 54.

The Delhi ITAT held that assessee had booked a semi finished flat with the builder and as per agreement, he had to make payment in instalments and the builder was to construct the unfinished bare shell of flat for finishing by the buyers on their own to make it liveable.

It had to be considered as a case of purchase of property for construction of new residential house and not purchase of a flat. Therefore, he had a time window of three years available to him to construct a house property. Further, the construction was completed within three years from the sale of original asset, which was accepted by the AO. Thus, the relief under section 54 was genuinely claimed by the assessee.