Assessee had sold an immovable property in February 2010 and claimed deduction under S. 54 on account of an advance given to OSPL for booking of a flat .AO had conducted enquiry and found that builder had presented plans for approval only in month of October, 2013 and plans were expected to be approved only by month of may, 2014. Accordingly, AO denied claim of deduction by holding that payment to OSPL was made prior to date of sale of property and, further, assessee had failed to acquire allotment of new flat within a period of 2 years from transfer of original asset . Tribunal held that project in which assessee had booked flat was neither on site nor plan was in existence . Builder had also expressed possibility of refunding of amount due to delay in launching of project . Tribunal held that neither on date of payment of advance nor till expiry of time period prescribed under S. 54 alleged new flat was in existence and at most assessee acquired a right to purchase a flat, in upcoming project to be developed in future. Accordingly on facts, investment made by assessee was not in accordance with scheme of provisions of S. 54 hence not eligible for deduction. (AY. 2011-12)
Jagdish Wadhwani. v. ITO (2018) 173 ITD 559 (Jaipur)(Trib.)
S. 54 : Capital gains-Profit on sale of property used for residence -An advance given to a developer for booking of a flat in a residential project to be developed-booked flat prior to sale of existing immovable property-Neither on date of payment of advance nor till expiry of time period prescribed in respect of alleged new flat was in existence-Denial of exemption is held to be justified.[S. 45]