Capital Gains Tax deduction on Allotment Letter of new flats
Order dated 20.5.2026 of the ITAT, Mumbai Bench, in ITA No.6105/Mum./2025 of the Income Tax Officer, Ward – 32(2)(1), Mumbai Vs. Vaibhav Vijay Sawant
Capital Gains Tax deduction on Allotment Letter of new flats
Deduction of capital gains tax on Allotment Letter of new flats
The assessee had furnished the commencement certificate and stated that the construction could not be completed due to various reasons beyond his control.
On the net consideration of Rs.2,52,02,110/- of sale of flat, the respondent assessee claimed deduction under section 54 of the IT Act on the investment of entire amount of long term gains in the new two flats. The assessee had given the allotment letter.
However, the deduction was disallowed on the ground that the possession of new flats was not given and purchase agreement was also not registered.
ITAT held that Section 54F cannot be denied merely because the builder delayed the possession and/or the possession was delayed for the reasons beyond the control of the home buyer.
Thus, builder’s delay in giving possession cannot be the home buyer’s disqualification for capital gains tax deduction.
