Sec. 54 Exemption

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Sagar Kulkarni (Querist)
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26 January 2011 Sec. 54 says new house property should be purchased within the period one year before or two years after the sale of existing (old) house.

Does this mean like if the assessee initiates the process of purchasing new house property within the period one year before the sale of old house, then everything including the possession of new house should be completed within the period one year before the sale of old house and the carry over of any process relating to purchase of new house to the period of two years after the date of sale of old house is not allowed?

For example, suppose assessee registers an agreement for purchase of new flat in say, Dec. 2010 and he is likely to get the possession of the said flat in March 2012, the last payment instalment being due on possession. Then what is the date or time period within which he can sell his old house to get exemption u/s 54? Also, is it the registration of agreement or the possession which is the determinant of exemption u/s 54?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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26 January 2011 Andhra pradesh high court in the case of CIT Vs. Ms. Shahzada Begum (1988) 173 ITR 397 said , date of possession is relevant for computing time limit and not the date of registration.
Same view is endorsed by Delhi high court in the case of Mr.Balraj Vs. CIT reported in (2002) 254 ITR 22.

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