Tuesday, April 12, 2016

Cancellation of agreement on non-completion of construction of house won't effect sec. 54 relief

a)  Assessee earned capital gain on sale of a residential house property. Thereafter, he paid certain amount to one 'M' for purchase of another residential house property and, accordingly, claimed exemption under section 54.
b)  In terms of agreement, 'M' had to transfer house property to assessee after getting it constructed. However, in view of failure of 'M' to complete construction of property, purchase agreement was cancelled and amount was refunded to assessee.
c)  Assessing Officer (AO) taking a view that assessee neither purchased nor constructed a new house property within the time-limit stipulated in section 54, rejected his claim for exemption.

d)  The CIT(A) confirmed the order of AO. Aggrieved assessee filed the instant appeal before the tribunal.