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Apr 12, 2025
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LTCG tax computation on sale of house property: How this ITAT order favouring a taxpayer will change the way capital gains is calculated
The Mumbai bench of Income Tax Appellate Tribunal on March 24, 2025 held that the allotment date and not registration date of a home determines the capital gains (long term or short term) for real estate property sale transactions. This is a very significant precedent for homeowners as usually the allotment letter is given when 10% or more payment is made and the registration of house is done when the builder gives possession of the flat. The difference in time between property allotment and registration can sometimes span over a few years if not months.
In the case being referred to here, a homeowner sold two flats in Malad, Mumbai in AY 2010-11 (FY 2009-10) for Rs 43 lakh each. The flats were alloted on October 7, 2005 (FY 2005-06) and sold in FY 2009-10 but were registered in FY 2015-16. Further, he reinvested the gains from the sale of these flats to buy another property and thereby claimed Section 54 long term capital gains (LTCG) tax exemption in his income tax return (ITR) for FY 2009-10.
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