Construction commenced before the date of sale of capital asset allowed as a deduction U/S 54

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Construction commenced before the date of sale of capital asset allowed as a deduction U/S 54

Dattatreya Varma Penmatsa (ITA 226/Viz/2020)

Facts:

  1. The assessee was denial of exemption of Rs. 32,57,272/- U/s. 54 of the Income Tax Act on the ground that the assessee has commenced the construction of the residential house property before the sale of long term capital asset.

  1. The assessee had purchased the land on 28/12/2012, on which the construction of residential building was commenced before the sale of capital asset and so the AO denied exemption U/S 54.

ITAT Vishakhpatnam held as below:

  1. The cost of land even though purchased prior and construction has also commenced before to the date of sale of residential house on 28/2/2015, shall be allowed as a deduction U/s. 54 based on the ratio laid down in the case of C. Aryama Sundaram vs. [CIT [2018] 97 taxmann.  com 74 (Madras)]

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