Handover of actual property is important for claiming sec 54? &/or depositing capital gain is mandatory?

Seema Sabharwal vs. ITO (ITAT Chandigarh)-12 Feb 2018

Some of the important pointers/ discussions of the case for easy reference:-

1- Various courts have held that if assessee invests the amount in purchase / construction of building within the stipulated period and the construction is in progress, then the benefits of exemptions, cannot be denied to the assessee.

2- We ma y further point out here that even the decision of the Hon'ble Calcutta High Court is in relation to the provisions of sec tion 54 onl y, wherein, the Hon'ble Calcutta High Court has categorically held that if agreement for purchase of residential flat is made and the entire amount is paid within three years from the date of sale, the basic requirement for claiming relief u/s 54(1) of the Ac t is to be taken as fulfilled. The issue, thus, is squarel y covered in f avour of the assessee b y the various decisions of the Hon'ble High Court....

3- In our view, if the assessee at the time of assessment proceedings, proves that he has alread y invested the capital gains on the purchase / construction of the new residential house within the stipulated period, the benefit under the substantive provisions of section 54(1) cannot be denied to the assessee....

4- Admittedl y, in this case, the assessee has invested the amount for the purchase / construction of the house within the stipulated period as also observed above while deciding the first issue. The assessee has proved such investment during the assessment proceedings and, thus, the assessee has complied with the requirement of substantive provisions and, thus, is entitled to the claim of exemption u/s 54F of the Act. In view of this, we direct the Assessing officer to grant exemption to the assesse e as permissible under the provisions of saeciton54 of the Act.

For reading full text of the case please refer link - http://itatonline.org/archives/seema-sabharwal-vs-ito-itat-chandigarh-s-54-if-agreement-for-purchase-of-new-residential-house-is-made-and-entire-purchase-price-is-paid-within-three-years-from-the-date-of-transfer-of-the-old-asset/seema-sabharwal-54-capital-gains/