Section 54

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My mom have a house which now we are interested in selling and buying another one. But the property which we are goin to buy has to be taken on my brothers name as we will get a home loan on his name. Now i would like to know whether a property can be taken jointly or wil it be ok if the joint names are that of my father and brother but not my mom,who is the actual owner of the house. Can she still claim an exemption under section 54.

Basically the question is, is it necessary to buy a house on the assessee name if the benefit of exemption under section 54 is to be taken ?

Thanking You. 

Regards,

Ritu Sharma.   
 

Replies (5)

It is possible that you sell the house in name of mother and purchase the new one in name of your brother since the purchase is in name of realted person.

Refer the case law: CIT vs. Kamal Wahal (Delhi HC) (2013)

Property can be purchased in the name of the spouse, but I have not read any caselaw where a property can be purchased in the name of a son/daughter.

If you purchase the new property in joint name, mother and son, then the mother can claim exemption upto the amount invested, and the son may claim principal/interest on home loan upto his share in the property.

Hello Mihir, Warm Regards. I would like you to go through the case law mentioned by me (Kamal Wahal). Here the court has mentioned that, Section 54F in terms does not require that the new residential property shall be purchased in the name of the assessee; it merely says that the assessee should have purchased/constructed "a residential house". It also noted that a purposive construction is to be preferred as against a literal construction, more so when even applying the literal construction, there is nothing in the section to show that the house should be purchased in the name of the assessee only. With reference to above verdict, assessee can purchase the residential property in name of other person, provided it is funded by teh assessee.

That is why i am a bit confused. And what kind of documents would i need to prove that she have contributed the amount in buying a house as the name would not be mentioned.

Ritu, you can you either cheque or DD to make payment and if possible use net banking from your mothers bank account. Ensure that money is deposited in teh same bank account so that in any case your can prove the trail


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