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Time limit for purchase of new house to avail sec. 54F relief to be reckoned from date of agreement to sell

July 19, 2019[2019] 107 295 (Gujarat)

INCOME TAX : Section 54F is a beneficial provision and is applicable to an assessee when old capital asset is replaced by a new capital asset in form of a residential house. Once an assessee falls within ambit of a beneficial provision, then said provision should be liberally interpreted

• Benefit of section 54F is to be given only when assessee purchases a property one year prior to sale of his property or two years after such sale. However, it is clear that an agreement to sell would extinguish rights and same would amount to transfer within meaning of section 2(47).

• Thus, where assessee had executed an agreement to sell in respect of a house property, purchased a new residential property within one year from date of agreement to sell and subsequently sale deed could not be executed within prescribed time, a valid transfer took place within meaning of section 2(47) by even executing agreement to sell and, consequently, relief under section 54F was to be granted to assessee in respect of purchase of new residential property subject to fulfilment of other conditions.

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