Date of handing over of possession of new property relevant for deduction u/s. 54

Satyamurti Ramasunder Vs ACIT (ITAT Delhi)

ITAT Delhi held that deduction under section 54 of the Income Tax Act is allowable based on handing over of possession and not based on payment of consideration. Date of handing over of possession of new property is relevant for deduction u/s. 54.

Facts- Notice u/s 154 was issued by AO stating that Long Term Capital Gain was not deductible u/s 54 as original asset was transferred on 05.08.2011. Where ready build house purchased on 24.07.2010 which was purchased beyond the period of one year (to be purchased from 06.08.2010).

After submission from the assessee, there is nothing on record to establish that the proceeding initiated by issuing notice under Section 154 had been concluded by passing appropriate order under the said section or have been dropped/vacated. However, subsequently, a notice under Section 148 was issued on 27.09.2017.

Conclusion- Held that possession was handed over to the assessee on 16.01.2011. Assessee had sold his original asset on 05.08.2011. Thus, the new property was purchased within one year of the sale of original asset which fulfils the requirement of sec. 54 of the Act.

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