Section 54 tax exemption before possession or registration

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Snehashish Ghosh (Querist)

21 December 2017 Hi,

I sold my flat in Ghaziabad for around 22 Lakhs in Oct 2017. After indexation the Capital Gain works out roughly to 4 Lakhs.
I am purchasing a new flat in Kolkata from a Builder for 11 Lakhs. I paid total 7 Lakhs in Nov 2017 to the Builder. I have collected money receipts for the payments and Sale Agreement signed by the Builder.
I have to file my Income Tax Return by 31 Jul 2018 for the year.
However, Possession of the flat and Registration (stamp duty etc.) will be delayed beyond last date of filing tax return i.e possibly to end of 2018.

My question is the following:
1. Is it Correct that since my capital gain is only 4 Lakhs and I have already paid 7 Lakhs to the Builder for the new Flat, I can go ahead and claim Section 54 Tax Exemption in my income tax return for the year before 31 Jul 2018, even though I will not have possession and registration by then ?
2. Is it correct that in question 1, I do not have to pay any tax on the capital gain due to Section 54 tax exemption ?
3. Is it correct that Possession or Registration (stamp duty payment) are NOT Must for claiming Section 54 Tax Exemption ?

Regards,
Snehashish Ghosh

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

22 December 2017 1. Correct. Can go ahead. Possession / registration is not mandatory.

2. Yes, if calculation of LTCG (Rs. 4 lakhs) is correct.

3. Yes. Inference - CIT vs. Shakuntala Devi (2016) 389 ITR 366 (Kar).

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