Become a Govt. Certified GST Practitioner. Batch begins 18th Nov. Register Now!

CAPITAL GAIN QUERY U/S. 54

Rakesh Jain (insurance agent) (104 Points)

18 January 2008

MY DAD HAD SOLD A RESI FLAT ON 10.12.2006 FOR 20 LAKHS WHICH WAS PURCHASED ON MAY 1981 FOR 50000 AND ALSO INCURED RENOVATION EXPENSES OF RS 200000 IN THE YEAR 2000.
AND TO SAVE TAX HE PURCHASED RESI FLAT AT RS 10 LAKH (BUT IN MY MOTHERS NAME) AND ONE FLAT AT RS 7 LAKH IN MY NAME. CHQUES WERE GIVEN FROM DAD ACCOUNT. AND ALSO WE INCURRED BROKERAGE & STAMP DUTY EXPENSES
SO I WANT TO KNOW HOW WILL BE CAPITAL GAIN TAXED ???
CAN HE CLAIM EXEMPTION ON THE ABOVE FLAT PURCHASED ???

with regards
Rakesh Jain

Reply
Follow
Share

20 Replies

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 18 January 2008

Purchase’ does not mean that the new house must be registered in assessee’s name - For the purpose of attracting the provisions of section 54, it is not necessary that the assessee should become the owner of the property purchased. The word ‘purchase’ occurring in section 54(1) has to be given its common meaning, viz., buy for a price or equivalent of price by payment in kind or adjustment towards a debt or for other monetary consideration. Therefore, for the purpose of applicability of section 54, registration of the document is not imperative - Balraj v. CIT [2002] 123 Taxman 290/254 ITR 22 (Delhi). Holding of legal title within prescribed time is not a pre-condition - Taking into consideration the letter well as the spirit of section 54 and the word ‘towards’ used before the word ‘purchase’ in section 54(2), it seems that the word ‘purchase’ is not used in the sense of legal transfer and therefore, the holding of a legal title within a period of one year is not a condition precedent for attracting section 54 - CIT v. Dr. Laxmichand Narpal Nagda [1995] 211 ITR 804 (Bom.). YOU HAVE TO GO THROUGH THE ABOVE JUDGMENTS TO FIND SOLUTION TO YOUR PROBLMES

Upgrade to CAclubindia Pro. Subscribe Now!

Rakesh Jain (insurance agent) (104 Points)
Replied 19 January 2008

BUT SIR BOTH THE AGREEMENT HAVE BEEN REGISTERED IN RESPECTIVE NAME. I.E. FATHER HAS EARNED CAPITAL GAIN & PROPERTY (FLAT) HAS BEEN PURCHASED IN MY MOTHERS NAME & MY NAME. BUT THE PAYMENT HAS BEEN MADE FROM DAD'S ACCOUNT SO I WANTED TO KNOW THAT CAN HE CLAIM EXEMPTION

(Guest)

I 'm also in search of answer to this query

Rakesh Jain (insurance agent) (104 Points)
Replied 21 January 2008

help dear

Rakesh Jain (insurance agent) (104 Points)
Replied 21 January 2008

pls reply

Upgrade to CAclubindia Pro. Subscribe Now!

Irshad (Article) (1426 Points)
Replied 22 January 2008

I am expecting some more replies to this for this query...

CA.D.K.BAYYAREDDY (Chartered Accountant) (117 Points)
Replied 23 January 2008

You can claim Exemption U/s. 54 of the IT act. Your father sold reidential property and purchased new house proeprty in your mother name and in your name. Registration is not the criteria to decide tax. Your dad had paid money from his sale proceeds. But you hanve not mentioned time period in your Query?

(Guest)

Interesting Topic.

Rakesh Jain (insurance agent) (104 Points)
Replied 25 January 2008

PERIOD OF SALE & PURCHASE IN WITHIN ONE MONTH

Rakesh Jain (insurance agent) (104 Points)
Replied 25 January 2008

PERIOD OF SALE & PURCHASE IN WITHIN ONE MONTH

Upgrade to CAclubindia Pro. Subscribe Now!

Rakesh Jain (insurance agent) (104 Points)
Replied 25 January 2008

ONE OF MY FRIEND SAID YOU SHOULD HAVE REF TO SOME CASE LAWS. CAN ANYBODY HELP THE ABOVE QUERY WITH CASE LAWS

(Guest)

The topic is interesting. A practical solution could be that both you and your mother can enter into an agreement to sell in favour your father. But this should have been done within the time limit.The other issue is that whether buying of more than one house is allowed u/s 54.Recently there was some judgement which said it can not be allowed.