Allotment Letter By Developer Shall Be Treated As 'Construction' For Benefit Of Set-Off Of Capital Gains U/S 54: Kolkata ITAT

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) ruled that an allotment letter by a developer should be treated as ‘construction’ for the purpose of set-off of capital gains under Section 54 of the Income Tax Act. The case involved an individual who purchased a residential flat jointly with his wife and received an allotment letter from the developer. The ITAT referred to a CBDT circular and clarified that allotment of flats by cooperative societies and similar institutions should be treated as ‘construction’ for capital gains exemption. The tribunal held that payments made to the developer through account payee cheques constituted an agreement to sell, granting the benefit of Section 54. This decision emphasizes the importance of recognizing allotment letters as valid agreements for capital gains exemption.