assessee shall be liable to pay the tax thereon? Strictly applying the provision, one is compelled to think that the exemption shall stand withdrawn in case of any delay beyond three years.
However, relying on the ruling of higher judicial authorities, one can heave a sigh of relief, since it has been repeatedly held that where it is found that most of the sales consideration has been spent for construction of house, but some portions are not complete for various reasons, the assessee is not liable for delay on part of the builder.
The courts are taking a liberal view in respect of Section 54/54F, and are holding that merely because the builder delayed the possession of the flat, the assessee cannot be held liable to tax. Even the CBDT has clarified that an investment in a self-financed flat will qualify as construction under Section 54F and the date of allotment of flat by an institution will be the date and payment is only a follow-up action and taking possession of the flat is only a formality.
The writer is managing partner, Nangia & Co