“Section 54(2)”
The decision most relied on for Section 54(2) is Sanjeev Lal v. CIT (365 ITR 389), cited in 122 judgments on BharatTax.
Leading authorities on Section 54(2)
For claiming capital gains exemption under beneficial provisions like section 54, the 'date of transfer' can be the date of the agreement to sell, particularly when coupled with substantial advance consideration or an enforceable right, adopting a purposive and liberal interpretation to acknowledge the assessee's intent.
For capital assets acquired by gift or will, the indexed cost of acquisition under Section 48 is computed with reference to the year the previous owner first held the asset. The period of holding for determining if an asset is long-term also includes the previous owner's holding period, as per Section 2(42A).
For exemption under Section 54, the expression 'a residential house' allows for investment in multiple residential units that form one functional unit, as 'a' does not imply a singular number. The amendment to Section 54, effective from April 1, 2015, is prospective.
For capital gains exemption under Section 54F, the new residential house is not required to be purchased exclusively in the assessee's own name; acquisition in joint names or in the name of a spouse qualifies for the exemption. This principle also applies to Section 54 due to their pari materia nature.
A transfer of immovable property by way of sale is legally valid only through a duly stamped and registered deed of conveyance. Unregistered instruments like agreements to sell, General Power of Attorney, or wills do not transfer title or create an interest in the property.
Even if statutory language appears merely enabling, courts infer a duty to exercise such power when it aids a citizen's right. Public authorities cannot decline to act when circumstances warrant help, nor can they act to a person's detriment without justification.
Additions to income based on statements recorded under Section 132(4) during a search operation are valid, even if later retracted, provided the additions are supported by corroborative seized material and other evidence establishing unaccounted income or transactions.
The word 'purchase' in Section 54(1) and analogous sections like 54F of the Income-tax Act must be given its common, liberal meaning, including acquisition for a price, payment in kind, adjustment of debt, or other monetary consideration. A transfer of a co-owner's share for consideration qualifies as a 'purchase' for claiming capital gains exemption.
