Date of Acquisition of New Property must be Date of Possession: ITAT allows Deduction under Income Tax Act [Read Order]

The Mumbai ITAT held that the date of possession of a new property should be deemed as the date of acquisition for deduction under Section 54 of the Income Tax Act. Sunil Amritlal Shah, the appellant, sold a jointly-owned flat and sought deduction under Section 54. Despite purchase agreement in 2009, possession was granted in 2011. \r

The AO considered the purchase date as 2009, denying the deduction. The bench, Raj Kumar Chauhan and Prashant Maharishi, ruled that possession date signifies acquisition. The appellant, having acquired the right to purchase, qualified for the deduction. \r

Section 54 allows exemption if a residential property is bought within a year prior or two years post sale. Thus, the appellant was eligible for the deduction.