27 December 2011
Father of my Client had purchased an open plot during Aug.2006 by paying Rs.160000/-.Now He (Father)sold the said Plot during Dec.2011 for an Amount of RS.1500000/-(Fifteen Lakhs).My client is only the son to his father ,but now my client intends to purchase a Flat by investing the whole sum of Rs.1500000/ (Fifteen Lakhs) in his name.whether my client can get capital Gain Tax exemption? or is it better to purchase the Flat in the name of client's father? or to purchase jointly to avail the benefit.Kindly enlighten on these points
27 December 2011
Son can Purchase the flat either in his name or In the name his father or jointly, son can claim full amount as exemption under section 54F of Income Tax Act. '
The same issue arose in the case of CIT Vs. Ravinder Kumar Arora, the Delhi high court held that Section 54F mandates that the house should be purchased by the assessee and it does not stipulate that the house should be purchased in the name of the assessee only. Here is a case where the house was purchased by the assessee and that too in his name and wife‟s name was also included additionally.
Such inclusion of the name of the wife for the above-stated peculiar factual reason should not stand in the way of the deduction legitimately accruing to the assessee. Objective of Section 54F and the like provision such as Section 54 is to provide impetus to the house construction and so long as the purpose of house construction is achieved, such hyper technicality should not impede the way of deduction which the legislature has allowed.
Purposive construction is to be preferred as against the literal construction, more so when even literal construction also does not say that the house should be purchased in the name of the assessee only.
Section 54F of the Act is the beneficial provision which should be interpreted liberally in favour of the exemption/deduction to the taxpayer and deduction should not be denied on hyper technical ground.
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