Section 54F exemption turns on registered transfer date, not a mere agreement to sell, for residential house investment timing.

Section 54F exemption is available only where the new residential house is purchased or constructed after the transfer of the original capital asset within the prescribed period. The article explains that an agreement to sell, by itself, does not transfer title or complete the transfer of immovable property; transfer occurs on execution and registration of the sale deed. Although section 2(47) gives "transfer" an extended meaning, that does not make every agreement to sell a transfer of the property itself. On the stated facts, construction completed before the registered sale deeds could not qualify for exemption for those flats, and deduction was allowed only for the flat whose sale deed was executed before completion.

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Issues: Whether deduction under section 54F of the Income-tax Act, 1961 was available where the flats were completed before the registered sale deeds of the original capital asset, and whether an agreement to sell could be treated as the date of transfer for that purpose.

Analysis: Section 54F allows exemption only where the assessee, after the date of transfer of the original capital asset, purchases or constructs a residential house within the prescribed period. The Court held that an agreement to sell of immovable property does not, by itself, transfer title or complete the transfer of the capital asset; such transfer occurs on execution and registration of the sale deed. Though section 2(47) of the Income-tax Act, 1961 gives an extended meaning to "transfer", that width does not mean that a mere agreement to sell, without more, always amounts to transfer of the property itself. The authorities relied on by the assessee were distinguished on their facts, and the Court held that the construction completed before the sale deeds could not qualify for exemption for those flats whose sale deeds were executed after completion.

Conclusion: Deduction under section 54F was allowable only for the flat whose sale deed was executed before completion of construction. For the remaining flats, the claim failed.

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