Benefit u/s 54

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This query is : Resolved

SUNIL AHUJA (Querist)

12 July 2012 I RECENTLY SOLD MY FLAT(LONG TERM CAPITAL ASSET) ON 1/7/2012.AND I HAVE PURCHASED A NEW FLAT . DATE OF AGREEMENT: 11/4/2011. BUT MY DATE OF POSSESION OF NEW ASSET IS 21/4/2012.(i.e. 3 months before date of transfer of old asset).
M I ELIGIBLE FOR CLAIMING BENEFIT U/S 54?

Hitendra Jain

Hitendra Jain (Expert)

12 July 2012 To claim exemption u/s 54 assessee required to construct / purchase a residential house either One year before the date of transfer or Two year after from the date of transfer.
When date of transfer of the asset is 1 July 2012
The New property has to be acquired during 1 July 2011 to 1 July 2013.

SUNIL AHUJA

SUNIL AHUJA (Querist)

13 July 2012 My actual query is that for one year before the date of transfer whether date of agreement should be considered or date of possession should be considered?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

18 July 2024 Under Section 54 of the Income Tax Act, 1961, which deals with exemption on capital gains from the sale of a residential property when invested in another residential property, the relevant dates to consider are the date of transfer of the old asset (sale of flat) and the dates related to the acquisition of the new asset (purchase of new flat).

### Key Points to Consider:

1. **Date of Transfer (Old Asset):**
- You sold your flat on 1/7/2012. This is the date when the capital gains are triggered.

2. **Date of Agreement (New Asset):**
- The date of agreement for purchase of the new flat is 11/4/2011.

3. **Date of Possession (New Asset):**
- The date of possession of the new flat is 21/4/2012, which is within 3 months before the date of transfer of the old asset (1/7/2012).

### Eligibility for Section 54 Benefit:

- **Conditions for Exemption:**
- To claim exemption under Section 54, you must purchase or construct a new residential house within a certain period.
- For purchase: The new residential house should be purchased within 1 year before or 2 years after the date of transfer of the old asset.
- For construction: The new residential house should be constructed within 3 years after the date of transfer of the old asset.

- **Relevant Periods:**
- The period of one year before the date of transfer of the old asset is crucial if you are claiming exemption based on the purchase of a new residential house.
- In your case:
- **Date of Agreement (11/4/2011):** This falls within the allowable period for claiming exemption, as it is within 1 year before the date of transfer (1/7/2012).
- **Date of Possession (21/4/2012):** This is also within the allowable period, being within 3 months before the date of transfer (1/7/2012).

### Conclusion:

Based on the information provided:
- Since your date of agreement (11/4/2011) for the purchase of the new flat falls within one year before the date of transfer of the old asset (1/7/2012), and the possession of the new flat (21/4/2012) is also within 3 months before the date of transfer, you are eligible to claim exemption under Section 54 of the Income Tax Act.
- The date of agreement (11/4/2011) is considered for determining eligibility under Section 54, as it falls within the one-year period before the date of transfer of the old asset. The possession date (21/4/2012) supports your eligibility by being within the required timeframe before the transfer date.

Ensure to comply with all other conditions and file your income tax return accordingly to claim this benefit.

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