Exemption of LTCG cannot be denied on residential property acquired by other than sale deed

Last updated: 27 February 2023

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The Income Tax Appellate Tribunal (ITAT) in New Delhi has ruled that individuals can claim exemption on Long Term Capital Gains (LTCG) for residential properties, even if the acquisition wasn't through a registered sale deed. The tribunal clarified that 'purchase' under Section 54F of the Income Tax Act includes acquisitions made via documents like a General Power of Attorney or an agreement to sell, as long as the property is residential and not commercial or agricultural. This decision ensures that taxpayers are not unfairly denied exemptions due to technicalities in property documentation.

Court :
ITAT, New Delhi

Brief :
The ITAT, New Delhi inACIT v. Sh. Sanjay Choudhary [ITA No.1274/Del/2020 dated January 23, 2023] has affirmed the decision of the Appellate Authority holding that the exemption claimed under Section 54F of the Income Tax Act, 1961 (“the IT Act”) would be granted to the assessee on its residential properties and assessee cannot be said to have not ‘Purchased’ the properties for not having the sale deed executed in its favour. Held that, acquisition of the properties by the assessee otherwise then by the registered sale deeds fall in the ambit of word ‘purchase’. Further held that, the nature and extent of construction like house, plot, cottage, farm house or villa are only indicative of the fact that property purchased is not a commercial property and is not an agricultural property.

Citation :
ITA No.1274/Del/2020 dated January 23, 2023

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