INCOME TAX ACT, 1961

Section 54

Capital gains - Exemption under section 54 - Advance payment made for purchase of a residential flat prior to sale of original asset, whether constitutes a part of purchase -

Question arose for consideration as to whether for the purpose of section 54 , advance payment made by assessee for purchase of a residential flat constituted a part of purchase or not, when such advance was made to the seller of flat prior to the date of sale of original asset. Held: Wording of section 54 would make it clear that law does not insist that sale consideration obtained by assessee itself to be utilized for purchase of house property. The expression 'purchased' or 'constructed' used in Notes on Clauses of Finance Bill, 1982 amply makes the intention of the Legislature clear and, therefore, advance payment made by assessee for purchase of a residential flat constituted a part of purchase for the purpose of section 54.

Relied:CIT v. Bharti Mishra (2014) 265 CTR 374 (Del-HC) : 2014 TaxPub(DT) 1636 (Del-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2013-14

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