Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Capital Gains

Deepa (CA and CS Final B.Com University First) (195 Points)

21 December 2009

Can Exemption be claimed u/s 54F if the assessee invests in a joint property (Residential Property with her daughter) out of the proceeds of the LTCG arising on the sale of the land owned by her. Please help me out with a proof.

Reply
Follow
Share

8 Replies

CA CHINTAN AJMERA (Chartered Accountant) (2987 Points)
Replied 21 December 2009

Yes you can claimed

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Max Payne (employed) (2574 Points)
Replied 21 December 2009

Yes, fractional ownership can also be acquired to avail benefit.

But it is important that the person who makes the capital gain, actually invests the net consideration in the capital asset, i.e., the other person should not be the person who makes all the investment.

1 Like

bharat (ARTICLE) (86 Points)
Replied 21 December 2009

Yes, she can claim exemption but only upto her share in that house property ( the amount which is invested by her )

1 Like

Deepa (CA and CS Final B.Com University First) (195 Points)
Replied 22 December 2009

Thank you.

Can the same be supported with a case study or any statement in the Act?

NARENDER PAWAR (CA final Student) (337 Points)
Replied 22 December 2009

yes u can claimed

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 22 December 2009

Originally posted by : Deepa
	Thank you. Can the same be supported with a case study or any statement in the Act?

Hi deepa, the statement in ACT not directly states such things, but few conditions indirectly specifies that the assessee can claim exemption to the extend of his share in new asset or the amount invested in capital gains account scheme.....

But yes, as said, a person can claim deduction u/s 54, if she has capital gain from RHP and the same is invested in RHP only...

1 Like

Max Payne (employed) (2574 Points)
Replied 22 December 2009

Originally posted by : Deepa
	Thank you. Can the same be supported with a case study or any statement in the Act?

These are cases for section 54 of the act, which recognises exemption for fractional ownership of the new asset.

1. where the assessee sold a house property owned by her and out of the sale proceeds purchased 15 per cent share in another house property owned by her husband and son, exemption was allowable even though the assessee was residing in the said house prior to purchase, and continued to reside in the same house after purchase - CIT v. Chandanben Maganlal [2002] 120 Taxman 38 (Guj.).

2. Exemption is allowable even if a share in new property is purchased - When the Act enables an assessee to get exemption from payment of tax in respect of purchase or construction of a residential house, purchase or construction of a portion of the house should also enable the assessee to claim the exemption. It is possible that a person may not be in a position to purchase the whole residential house at a time and in the circumstances an assessee might purchase a portion of the house or some interest in the house. Thus, where the assessee sold a house and from the sale proceeds purchased 15 per cent undivided share in a house property from her husband and her son, and she was earlier residing in that house, exemption under section 54 can be allowed - CIT v. Chandanben Maganlal [2000] 245 ITR 182 (Guj.).

But there is an issue in Section 54F regarding fractional ownership. Please go thru this.

Residential house must be in the name of the assessee only - For qualifying for the exemption under section 54F, it is necessary and obligatory to have the investment made in residential house in the name of the assessee only. Thus, investment of sale proceeds of agricultural land by the assessee in purchasing plot and constructing residential house thereon in name of his only adopted son would not qualify for exemption under section 54F - Prakash v. ITO [2008] 173 Taxman 311 (Bom.).

https://www.thehindu.com/biz/2008/12/29/stories/2008122950061300.htm

I am sorry; i gave u an incomplete answer first time.

1 Like