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Issues involved: Appeal for exemption u/s 54 on long-term capital gain from sale of residential flat.
Summary: 1. The assessee sold a flat and claimed exemption u/s 54 for investing in a new property. The Income-tax Officer (ITO) rejected the claim stating the new flat was purchased more than 12 months before the sale of the old flat. The Commissioner of Income-tax(Appeals) upheld the decision. 2. The Departmental Representative argued that exemption u/s 54 is not applicable as the assessee failed to buy a residential property within the specified period. Citing legal precedents, the Representative supported the rejection of the claim. 3. The assessee contended that the relevant date of purchase should be when the new flat was ready for occupation, not the agreement date. The assessee relied on various legal cases to support this argument. 4. The Tribunal analyzed the situation, emphasizing the complexities in metropolitan cities regarding house purchases. It noted the peculiarities of flat transactions and the importance of determining the ownership date for exemption u/s 54. 5. Referring to a previous case, the Tribunal concluded that the relevant date for purchase should be when the flat was ready for occupation. Based on this interpretation, the Tribunal allowed the assessee's appeal, granting exemption from capital gains tax. 6. The decision highlighted the need to reconcile legal provisions with the unique aspects of flat ownership in metropolitan areas, ensuring that taxpayers are not unduly denied benefits under section 54 of the Income Tax Act, 1961.
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