Veena Chadha Vs Assessing Officer (ITAT Delhi)
Flat Booked, Builder Failed: Can Section 54 Exemption Still Be Claimed?
A taxpayer who invests in a new residential flat within the prescribed time should not lose Section 54 relief merely because the builder fails to complete the project or execute a registered sale deed. The Delhi Bench of the ITAT has expressed this view in Veena Chadha v. Assessing Officer, ITA No. 5762/Del/2026, AY 2015–16, decided on 28 September 2026.
The Tribunal did not finally quantify or grant the exemption. It restored the matter to the AO to verify the capital gains computation and the documents supporting the investment. Its clear direction, however, was that non-completion of the purchase, in circumstances beyond the assessee’s control, cannot by itself defeat an otherwise admissible Section 54 claim.
How the dispute arose
The assessee had not filed a return for AY 2015–16. Information available to the Department showed that she had sold an immovable property. After issuing a notice under Section 148A(b), the Department reopened the assessment.
During reassessment, the assessee explained that the property sold at Munirka, New Delhi, was jointly owned with her husband and that her 50% share of the sale consideration was ₹55,00,200. She claimed an indexed acquisition cost of ₹35,92,814, resulting in a long-term capital gain of approximately ₹19.07 lakh. She also claimed to have invested in a new residential property and sought exemption under Section 54.
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