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Capital gain

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This query is : Resolved

kunal (Querist)
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01 August 2013 Mr. X sold his residential house and claimed exemption u/s 54 amounting to rs 30 lacs.

breakup of exemption claimed:
exemption on account of purchase of flat under construction link payment plan
Rs. 5 Lacs paid before 31st july
Rs. 25 Lacs deposited in CAG scheme..

now Mr. paid all the money (Rs 25lacs) before 3 years from the the date of transfer of his residential house but he didn't get possession on the default of construction company..

in the above scenario will the exemption be disallowed on the ground of possession?

Point to be considered:

1) whether flat under construction link payment plan amount to purchase or construction? (a view can be taken that construction company constructing the flat on the behalf of Mr. X)

Dear Experts please reply..

Sanket Shah

Sanket Shah (Expert)
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01 August 2013 Sec 54 is beneficial provision. Hence it can not be construed in strict manner. Mr X has used the funds for intended purpose. He will not be denied exemption u/s 54. There are various favorable case laws on the issue.

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