Sec 54 benefit gets forfeited unless taxpayer meets multiple criteria

An ITAT ruling has clarified seller can commit to buy new house much before selling old one

A recent ruling of the Income-Tax Appellate Tribunal (ITAT) has clarified that the seller of a residential property can avail of capital gains tax exemption even if she committed to buy a new house much before selling her old property. The Delhi bench of the ITAT ruled on the applicability of Section 54 of the Income-Tax (I-T) Act in the case of Reema Chawla.

Says Amit Bansal, partner, Direct Tax, Singhania & Co., “Under Section 54, an individual or Hindu Undivided Family (HUF) selling a residential house property can claim the exemption for capital gains if they invest the proceeds