Exemption u/s 54 not to be denied due to delay in completion of project beyond control of assessee

Exemption u/s 54 not to be denied due to delay in completion of project beyond the control of assessee

Issue/Justification

With difficulties being faced by the Real Estate Sector business (due to delay in clearances, nonavailability of finance and a sluggish demand) numerous projects are delayed in execution. As a result, an assessee who has sold a house and invested in another flat which is under construction by a builder /developer and is to be completed within the time limit prescribed u/s 54, is being denied exemption for no fault on his part.

Budget 2018 Suggestion by ICAI

• It is suggested that where substantial part of the consideration of the new flat has been paid, but completion of construction has been delayed for reasons beyond the control of the assessee; exemption u/s 54 may not be denied.
•  Suitable safeguards to prevent misuse of such provision may be incorporated in the statute. However, hardship caused to genuine home-buyers, should be alleviated.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)