INCOME TAX ACT, 1961

Section 54

Capital gains - Exemption under section 54 - Rejection on the ground that no possession was given to assessee as flat was under construction -

Assessee, though had not claimed any deduction under section 54 in the return, however, during the course of assessment offered long-term capital gain from sale of property and claimed exemption under section 54. AO refused such claim holding, inter alia, the builder had not given possession to assessee as the flat was under construction, no documents such as agreement for sale of UDS or construction agreement entered with the builder were submitted during assessment proceedings and flat was not transferred to assessee. So, AO assessed the entire profits under the head 'Income from other sources”. CIT(A) dismissed the appeal of assessee.Held: There was an agreement for purchase of a property at metro zone between the assessee and the developer. In accordance with the agreement, out of agreed sale, assessee paid a part amount till 31-12-2013. Since there was a delay in handing over the project and assessee did not want to take the risk, he found a party to sell his rights. Therefore, transaction was completed and accordingly, assessee had gained a profit from the sale of his rights, which was a capital asset. Since the basic facts were not disputed and assessee gained from its capital rights, as pleaded by assessee, gain which arose out of the transaction was assessable under the head long-term capital gains only. Therefore, assessee was entitled to the benefit sought under section 54.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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