Capital gains exemption

It was not a pleasant query to read. Considering that u have made 95% of the payment and then the construction has been stalled. May you succeed in the legal remedy.

Coming to income Tax Provisions.

For investment in property under construction - Period of Holding will be calculated from the date of allotment. - So if u sell the first property in 2016 - It would be a long term capital asset -

Various courts and tribunals have held that purchase of property under construction and making construction linked/part payments would qualify as construction of a residential house - Eligible for exemption u/s 54.

Also there is no bar for on the commencement of the construction activity - Only criteria is that construction of the house should be complete within 3 years.

Courts have taken a view that section 54 being a beneficial provision should be given a liberal interpretation - hence exemption shall not be disallowed even if your builder fails to handover the possession in the 3 years.. provided substantial payments have been made.

Hope your query is resolved.

CA Prateek Jain

New Delhi

Thanks for your reply Mr Jain.

So if I understand you correctly, I can invest the sale proceeds from sale of my first incomplete flat in the second flat that I have booked (and the allotment of this second flat predates the sale realization of the first flat) and claim long term capital gains exemption against such investment?

Regards,

Yes it is possible to calim exemption in respect of the second flat