ITAT allows capital gains exemption to an assessee
The tribunal found the requirement of the Income Tax Act on purchasing a property within a specified period, irrelevant
ITAT allows capital gains exemption to an assessee The tribunal found the requirement of the Income Tax Act on purchasing a property within a specified period, irrelevant The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that while allowing the capital gain exemption under the Income Tax Act, 1961, the date of possession would be considered. The assesses, is...
ITAT allows capital gains exemption to an assessee
The tribunal found the requirement of the Income Tax Act on purchasing a property within a specified period, irrelevant
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that while allowing the capital gain exemption under the Income Tax Act, 1961, the date of possession would be considered.
The assesses, is a salaried employee, whose Income Tax Return (ITR) return came up for scrutiny. On assessing the ITR, the assessing officer (AO) denied any benefit of deduction to him under the IT Act. The AO maintained that the assessee had not purchased any residential property within the specified period (1 year before or 2 years after the sale of the existing property) under the IT Act.
The AO contended that the new purchase was done in February 2012, the date on which the Agreement for Sale was registered.
Contrary to this, the assessee claimed that in May 2011, along with his wife, he had booked an apartment in an under-construction building 'Bankston', located at Rodas Enclave, Thane (W) from Roma Builders Pvt. Ltd. He should, therefore, be allowed the benefit.
The bench comprising ITAT Vice-President Pramod Kumar and judicial member Kuldip Singh allowed the contention and held, "Based on the facts, the possession by the assessee in April 2016, should be taken as the date of purchase. The requirement of the IT Act that the assessee should purchase residential property within the specified period and the source of funds is quite irrelevant."
The tribunal added, "Nowhere, it has been mentioned that the funds received as consideration from the sale of the original asset must be utilized for the purchase of the new residence. Since the date of purchase falls within a period of two years from the sale of the original asset, the assessee is entitled to benefit under the IT Act."