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Section 54: reinvestment in other person's name

Pawan Sharma (Software Engineer) (38 Points)

28 October 2013

I've sold my old residential property after 3 years from purchasing it, which gave me long term capital gains of 30 lacs. The old property was in joint name of me & my father.

With this capital gains, I plan to buy a new house but would prefer to register it in my mother's name. Would I still get exemption under Sec-54 ?

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7 Replies

Nikhil Kaushik (Fellow CA) (86474 Points)
Replied 28 October 2013

In past judiciary has ruled in favor of the assessee in such cases.

However, in past few years, judiciary has approached a much less liberal approach and often disallowed exemption where the new house property is not in the name of the assessee.

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Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 28 October 2013

u get exemption. There is no express provision in sec 54 that investment should be in the name assessee. Judicial Pronouncement in Latest case DIT vs mrs. Jennifer bhide.

CA Pallav Singhania (IT System Auditor) (33678 Points)
Replied 28 October 2013

However, you can purchase the property jointly with your mother name. i.e in your name and your mother's name..

Under this you can claim exemption U/S 54..

regards,

Nikhil Kaushik (Fellow CA) (86474 Points)
Replied 28 October 2013

Dear Kishor,

You are confusing with the facts of Jennifer Bhide case. In that case the investment was made in the joint property. In the present case, the assessee wishes to buy the house in the name of his mother. That is the bone of contention.

Mihir (Wealth Manager) (5293 Points)
Replied 28 October 2013

The property was in joint name. You got LTCG of 30 lacs. This LTCG shall be divided between you and your father. So, not only you, your father, too, is required to avail this exemption u/s 54.