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Property purchased by a huf in the name of a member

29 August 2011

I have a client, who sold his HUF property and purchased from the sale proceeds, commercial property in his own name and a residential property in the name of his son, both being members of the HUF.

I want to know the tax implications for the same.

1. Can the HUF claim the benefit of Section 54F?

2. In whose hands will the income derived from the new property purchased will be taxed, the HUF or the member?

3. Since the new property purchased is in the name of the member, will it be treated as gift or something else in the hands of the member. Or simply, there wont be any tax implication in the hands of the member for this part?

I will really appreicate it if you can second your opnion with a case law, notification, etc.

Thanks

CA. Sidharth Sahni

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1 Replies

CA. Sidharth Sahni (CA) (47 Points)
Replied 30 August 2011

C'Mon please help me with this. Its urgent and important.

Also, please tell me can the AO disallow dedcution u/s 54F if the payment has been made from the spouse's bank account. The case is that the assessee's husband was the registered owner of the property, but the above mentioned HUF and the assessee were the beneficial owner [this fact has been accepted by the AO] Now because of the husband's registered ownership, the original sale proceeds were received in his account. And further for purchase of HP for 54F, payment was made from that very account. Can the AO disallow deduction u/s 54F stating that the money since received in the account of the husband belonged to him and the assessee had not invested towards the purchase of the property.