Case Law Details
Mohan Lal Jain Vs ACIT (ITAT Delhi)
In a recent decision, the Income Tax Appellate Tribunal (ITAT) Delhi, in the case of Mohan Lal Jain Vs. ACIT, has reiterated the importance of adhering to the provisions of Section 54 of the Income Tax Act, 1961, for taxpayers seeking exemption on capital gains arising from the sale of a residential property.
The case revolved around an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], challenging the denial of exemption claimed under Section 54 of the Act. The assessee had declared a Long Term Capital Gain (LTCG) of Rs. 35,58,612/- from the sale of a property situated in Dwarka, Delhi, for the Assessment Year 2017-18.
The crux of the matter was whether the assessee fulfilled the conditions laid down in Section 54 to avail the exemption. As per Section 54, to claim exemption on LTCG arising from the sale of a residential property, the taxpayer must, within a specified period, either purchase another residential house or construct a residential house. The specified period is within one year before or two years after the date of transfer of the old house, or within three years from the date of transfer of the old house if the taxpayer opts for construction.
The ITAT observed that the assessee had entered into an agreement to purchase a new residential villa before the sale of the old property. However, the construction of the new property had commenced much before the execution of the sale deed of the old property. The tribunal noted discrepancies in the documentation provided by the assessee regarding the acquisition and possession of the new property.
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