Exemption u/s 54

In my opinion, the date of booking the houe should not matter. The only condition is you should invest the capital gain in another residntial property within the time limit. Make sure that the allotment letter asignng you the flat is given to you in the period specified so you can link the sum paid to the specific property.

Thanks Rashi. That is helpful. In my case the builder had given me provisional letter of allotment in June 2010. Will it make any difference?

Will I get the exmption for the loan repayment in full to the bank from the sale proceed also?

Thanks,

Allowing of exemption under Section 54/54F of the Income-tax Act

If the builder does not complete construction of house within three years, is the taxpayer liable to pay the tax thereon? While the plain reading and strict application of the provision seems to suggest that exemption is not allowable in case of any delay beyond three years. But there have been cases where the judge has given relief to taxpayers in those cases where they found that most of the sales consideration have been spent for construction of house, still some portions were not complete for various reasons. The courts in India have taken the view that section 54/54F being a relief provision, should be viewed in relaxed manner. Various principles laid down by the courts for interpreting the date of acquisition are as under:

* If taxpayer has acquired substantial domain over new house and has made substantial payment towards cost of construction within a period specified under section 54/54F, then taxpayer can be said to have complied with requirements for claiming exemption, even if construction of building is not completed within a specified period.

* Merely because the builder failed to hand over possession of the flat to the taxpayer within the specified period, the taxpayer cannot be denied the benefit of the said benevolent provision.

* A mere absence of the sale deed or a procedural delay in obtaining registration, does not disentitle a taxpayer from the applicable exemption. If investment is made in the construction of house, then it should be deemed that sufficient steps have been taken and this satisfies the requirements of section 54/54F.

* The Central Board of Direct Taxes (CBDT) has also clarified that to qualify as an investment for construction under section 54F the crucial date is the date of allotment of flat by an institution and payment of installments was only a follow-up action and taking possession of the flat is only a formality.

However, one needs to remember that the court needs to be satisfied that the sales consideration was used for investment in the new residential house.

The scheme provided by the government is a tax saving as well as an effective investment scheme for the taxpayer's who get a double privilege through wise investment. It can be said that the provision has to be construed liberally and for achieving the purpose for which it stands incorporated in the statute.

@ MOHIT KUMAR

You should use the gains part[substantial portion ] from june 2014  till construction till 3 years from sale of old house. It is sufficient to show that gains part has been used up for buying under constructed house. If you are not able to use up the entire amt. The remaining balance portion can be used to buy LTCG bonds such as NHAI or REC [lock in perio 3 years] and claim exemption u/s  54EC. 

also read/download the following IT dept tutorial 

https://www.incometaxindia.gov.in/Tutorials/16.%20Exemption%20under%2054.pdf