Income Tax Sec 54F Tax Relief Allowed if Payment made to builder before sale of Assets : ITAT

Section 54F Tax Relief if payments made to builder before date of Sale of Capital Assets

Facts of the Case

 Assessee has shown capital gain on sale of shares in 2010 and also claimed deduction u/s. 54 F of the act.

Assessee has booked a flat  in 2006 with builder and paid the amount in various installments.

Assessing officer view : At the time of booking of the above apartment flat the construction of the flat had not started. It commenced in the year 2007 and completed in FY 2012-13. Therefore according to him this flat cannot be considered as a "new asset".

 He therefore stated that it is a case of a construction of a new house property. As the new asset is constructed in this case the time limit according to him of the date of sale of original asset till the expiry of 3 years thereafter applies.

Therefore he denied that the eligible deduction under section 54F of the act.

Decision of ITAT

Assessee has purchased a house property i.e. a new asset and is entitled to exemption u/s. 54F of the act despite the fact that construction activities of the purchase of the new house has started before the date of sale of the original asset which resulted into capital gain chargeable to tax in the hands of the assessee.