• Benefit u/s 54 on sale of house property

need your guidance on this, 

i have purchased flat A in F.Y 2012-13.for 15 lakhs and i m selling it now in F.Y. 2018-19 for 27 Lakhs. 

i have booked a under construction house B in F.Y. 2017-18. for 25 lakhs 

for flat B, Paid 1st installment of 5 lakhs in March 2017. and done registration in March 2017 only (builder advised to do it immediately as after july2017 GST was getting applied) 
after that i have Paid 6 Lakhs Rs. in Oct. 2017 and thereafter as per the demand raised by builder on completion on work. 
possession to flat B in Dec. 2019.

as per my knowledge , from house A i will earn Capital Gain , but if i reinvest the capital gain in another house " 1 year before or purchase property within next 2/3 years from the sale date , i dont have to pay capital gain.

my question is can anybody please elaborate "1year before the sale date" condition ... i read some articles where the purchase date considered a agreement / registration date, somewhere it is said Possession Date /O.C. Date or a date on which the 100% payment made to builder. 

so the arising capital gain on sale of Flat A (assuming. flat A sale deed date Oct. 2018), can i claim exemption u/s 54 as i purchased flat B (1 year before or 2 year after flar A sale date) ???

the new flat B purchase agreement made around 18 months before the sale date of Flat A but the possession will be in Dec. 2019. 

Thank you in advance .
Asked 8 months ago in Income Tax from Thane, Maharashtra


The exemption shall not be available for Flat B.

Suppose a house property is sold in June 18. So, for claiming the exemption, investment has to be made from June 17 to June June 20/ 21( for construction).

Since in your case, property purchased is before 1.5 years, exemption shall not be granted.

Lakshita Bhandari
CA, Mumbai
2470 Answers
91 Consultations

5.0 on 5.0


Hope you are doing well !

No, you are not eligible for exemption u/s 54 because another residential property should be purchased in within 1 year before date of transfer i.e.

If you are selling the property in current month i.e july 2018 then , the new property has to be purchased in July 2017. Hence, you have made investment before 1.5 year.

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
1458 Answers
11 Consultations

4.9 on 5.0

No you will not be able to claim deduction because investment to be done one year before the sale and in your case it's 18 month before sale date .

Swati Agrawal
CA, Indore
848 Answers
2 Consultations

5.0 on 5.0

Thanks for the feedback.

For sale of property, the registration date of the property is considered as the date of sale.

Where as for purchase of a property, it is the date of allotment which is considered as date of acquisition.

This the generally accepted criteria by the assessing officer.

The case as cited by you, is in favor of the assessee and so for you. But, such approach is litigative. There are high court and supreme court rulings in against too.

Lakshita Bhandari
CA, Mumbai
2470 Answers
91 Consultations

5.0 on 5.0


You will not be eligible for exemption on Flat B

since the property is purchased before 1.5 years of sale.



Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Dear Sir,

Transfer of capital asset will be considered when sale deed was executed by you i.e. Oct.2018 (assuming) so capital gain will arise in F.Y. 2018-19. As you said you had invested in under construction property before execution of sale deed then you will be entitled for exemption u/s 54. Refer case law [CIT v J.R. Subramanya Bhat (1987) 165 ITR 571 (Karn)]


Vivek Kumar Arora
CA, Delhi
1971 Answers
75 Consultations

5.0 on 5.0

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