Long term capital gains

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Neelkant (Querist)
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22 December 2013 Dear expert,
One of our client had purchased a land during financial year 2000-01 in co-ownership with his wife and later on had incurred construction as well improvement cost on such. He during the Financial year 2013-14 sold the said property(registered in his and his wife's name) and respectively a long term capital gain had been arriving in the hands of both. Meanwhile a construction of a separate property in the name of his wife is already in progress and she has been claiming an exemption Us.54 by employing such capital gains in the said construction.
My query is whether the capital gains arising in hand of husband to can be transferred,in any manner, to wife so as to claim such amount also as an exemption...?

CA Kedar Sakhardande

CA Kedar Sakhardande

(Expert)
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22 December 2013 You situation is silent on date of completion of construction of the original property. Assuming its a long term capital asset and gain on sale of that property is long term capital asset, my view is as under

The original property is in joint ownership of husband and wife. The new property which is in construction is in the name of wife individually.

Here again presuming that the new property is in construction not more than 1 year prior to date of sale of original property (your situation is silent) , exemption of section 54 can be claimed.

If we analyse section 54 carefully, it says specifically that the proceeds from sale of property has to be invested by the assesee but no where the section mentions that the assessee should invest in his / her own name.

There is a case law favouring
(1) CIT v. V. Natrajan, 287 ITR 271 (Mad.)

(2) ITO v. Smt. Saraswati Ramanathan, 116 ITD 234 (Del.)

(3) JCIT v. Smt. Armeda K. Bhaya, 95 ITD 313 (Mum.

Note: If possible try to add assessee as a joint owner. Also try to retain perfect documentation trail of all the transactions . As the matter is open for klitigation for sure

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Neelkant

Neelkant (Querist)
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22 December 2013 Thanks a lot Sir for your precious guidance..and with respect to the unstated aspect in my query I would also like to provide that the construction is actually of another storey and is anticipated to be completed within one year from the date of sale

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