Date Of Possession Of Residential House Should Be Taken As Date Of Purchase For Section 54 Of Income Tax Act [Read Judgement]

/ JUDGEMENT / By / March 13, 2022

In the case of Reji Easow vs. Income Tax Officer, ITAT Mumbai has held that:

In view of the above we are of the considered view that on the facts of the present case the date on which possession is by the Assessee (i.e. 02.04.2016) should be taken as the date of purchase. The requirement of the Section 54 is that the Assessee should purchase a residential house within the specified period and source of funds is quite irrelevant. Nowhere, it has been mentioned that the funds received as consideration from sale of original asset must be utilized for the purchase of the new residential house [ACIT vs. Dr. P.S. Pasricha : (2008) 20 SOT 468 (Mumbai) (11-01-2008)]. Since the date of purchase falls within a period of 2 years from the sale of Original Asset (i.e. 21.05.2014), the Assessee is entitled to benefit under Section 54 of the Act. The alternate contention of the Assessee, that the benefit of Section 54 be granted to the Assessee by treating the transaction as a case of ‘construction’ in view of the judgment of Hon’ble High Bombay Court in the case of Hilla J B Wadia : 216 ITR 376, now being academic, does not require consideration.

In the result, this appeal is allowed in the terms indicated above.

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