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Deduction u/s 54

Others 585 views 1 replies

dear all,

 

a property is transferred bearing name A,B,C. Long term capital again arises. A & C with D & E (all relatives as per I.T.Act 1961) purchased a property & sale deed registered but there respective share not defined.

but they have made payment for purchase through their bank account in the following way

A  40%

C 30%

D 20%

E 10%

Deduction will be available in the manner they have made the payment or equal share?

Replies (1)

Theres no case law in my knowledge which I can give reference of but having regards to the Transfer of property Act for the purpose of determination of share/interest of owner in property (as in Income tax act, the exemption is available to the owner or co-ownwer)

 

Where immovable property is transferred for consideration to two or more persons and such consideration is paid out of a fund belonging to them in common, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property identical, as nearly as may be, with the interests to which they were respectively entitled in the fund; and, where such consideration is paid out of separate funds belonging to them respectively, they are, in the absence of a contract to the contrary, respectively entitled to interests in such property in proportion to the shares of the consideration which they respectively advanced.

In the absence of evidence as to the interests in the fund to which they were respectively entitled, or as to the shares which they respectively advanced, such persons shall be presumed to be equally interested in the property.

 

Therefore in my opinion in this case exemption shall be allowed to OWNERS (A and C) in  interests in such property in proportion to the shares of the consideration which they respectively advanced. i.e 57.14 and 42.86

However if interest in property can be destictive and undivided then such ratio shall be used.

Exemption is available to the assesse to whom capital gain arise, D and E can not avail exemption unless cap gain was also taxable to them.


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