Profit on sale of flat under construction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 November 2013 The assessee being an individual booked a flat in on 28.07.2007 in a building under construction. Amount paid by the assessee was shown as “Advance against flat” in his balance sheet. On 20.05.2010 the assessee sold the flat which was still under construction. The assessee has not taken the possession of the flat either because the same was not ready. The transaction resulted in gain which the assessee claimed in the income tax return as LTCG. Also the assessee claimed the benefit of Sec 54 as a new flat was booked by him in the year of sale. Can the ITO treat the profit as normal income instead of LTCG and deny the benefit of Sec 54 to the assessee ? Please note there was a simple agreement between the assessee & promoter. If the assessee is right,can someone provide relevant judicial pronouncement ?

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13 November 2013 Please follow the link

http://taxguru.in/income-tax/taxability-capital-gain-sale-construction-property-nature-gain-date-indexation-availability-benefit-section-54-54ec.html