Validity of Letter of Allotment by ITO, Income Tax

[Vishal v Kanakia]

Dear Sir,

I have purchased a Under-Construction Residential Flat in July 2011 by paying 75% Agreement Value.

Builder issued me Letter of Allotment on the same date.

I signed Sale Agreement and paid Stamp Duty + Registration Charges + VAT + Service Tax in September 2013.

Thereby I paid Balance 25% Agreement Value in March 2014.

The Building is still under-construction and I have not taken possession from the builder.

Now in December 2015, I sold my Under-Construction Flat to Mr X.

Further, I have invested the entire proceeds of the above Sale of Flat in a another ready to occupy Flat.

Now I have 3 options for the above transaction :

1) I pay Short Terms Capital Gains Tax (As sale is before 36 months if Agreement for Sale is considered as valid).

2) I pay Long Terms Capital Gains Tax (As Sale is after 36 months if Letter of Allotment is considered as valid).

3) I claim Tax Benefit under section 54F of Income Tax (As Sale is after 36 months of Letter of Allotment + New Residential Flat is purchased from its Sale proceeds).

Please guide what is the best option available for the above Transaction.

Regards,

Vishal K,

Mumbai.