Capital gain

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rahul aggarwal (Querist)
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21 September 2011 A Residential house property jointly in the name of father and son has been sold and entire capital gain is going to be invested in purchasing new residential house property.The problem is that mother is insisting that the new property to be purchased should be in her name only.

Now the question is whether exemption U/s 54 can be claimed if new house property is registered in the name of mother.

Or will there be any irregularity if mother's name is included and new house property is registered in three names i.e. Father Mother and Son without any capital contribution from mother.what wil be the status of section 54.
I request all experts to kindly response early and oblige.

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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21 September 2011 In Jt. CIT v. Smt. Armeda K. Bhaya (2006) 8 (II) ITCL 186 (Mum ‘F’-Trib) : (2005) 95 ITD 313 (Mum-Trib): (2006) 99 TTJ (Mum-Trib) 358, the assessee sold a property and purchased a flat out of the money received from the sale of property. The AO found that in the conveyance the number of purchasers were three, i.e., assessee, her mother and father. Consequently, the assessee was only a 1/3rd purchaser. Benefit of section 54 was worked out accordingly. The assessee contended that he was the only purchaser of the property and the entire sale consideration was paid out of her bank accounts. The names of mother and father were included for convenience to avoid court litigation on death of any party. Affidavits of father and mother of the assessee were filed deposing that the assessee had utilised all her own funds for purchase of new flat and mother and father had no right, title or interest in the said property. The CIT(A) allowed the assessee’s appeal, however, the expenditure incurred on repairs of flat was not allowed. It was held that as the father and mother were not having any right, title or interest in the new flat and entire expenses were borne by the assessee, therefore, full exemption under section 54 was allowable to the assessee. Further, the expenditure incurred on repairing the flat was also to be allowed.
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