#Section 54 IT Act

The ITAT Bangalore has ruled that taxpayers claiming exemption under Section 54 of the Income Tax Act qualify for relief if they reinvest capital gains by the extended due date under Section 139(4), not just the original due date under Section 139(1). This overturns rigid departmental interpretations and provides critical relief to individuals who delay filing due to genuine administrative or procedural delays, aligning the law with practical realities of compliance.

The ITAT Mumbai has ruled that payments made toward a new residential property before the one-year window preceding the sale of the old asset still count toward the cost of acquisition for Section 54 exemption. This clarifies that the entire investment, not just amounts paid within the statutory period, can be aggregated to fully offset long-term capital gains, benefiting taxpayers who make advance payments in real estate transactions.