Section 54 – construction of house should necessarily be complete within two years

In this case the assessee was denied exemption on the investments made with Delhi Development Authority. However, relief was granted by the Hon’ble High Court. It was held that section 54 of the Act of 1961 only says that within two years, the assessee should have constructed the house but that does not mean that the construction of house should necessarily be complete within two years. What it means is that the construction of house should be completed as far as possible within two years. In the modern days, it is not easy to construct a house within the time-limit of two years and under the Government schemes, takes years and years. Therefore, confining to two years’ period for construction and handing over possession thereof is impossible and unworkable under section 54 of the Act. If substantial investment is made in the construction of house, then it should be deemed that sufficient steps have been taken and this satisfies the requirements of section 54.  Therefore, the view taken by the Tribunal is not correct. Full Text of the Judgment is as follows :-

HIGH COURT OF MADHYA PRADESH
HON’BLE SHRI A. K. MATHUR, CJ & HON’BLE SHRI S.K. KULSHRESTHA, J.
Smt. Shashi Varma
Vs.

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