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Is ownership of house property necessary to claim exemption u/s 54ec?

Abhinav (B.Com) (29 Points)

04 June 2016

I'm one of 4 daughters of my father, who died without any will. As per the laws of AWAS VIKAS(local development authority), the property can be transferred only to one of the daughter. So we all signed an agreement among ourselves, transferring the property(from the name of my father) to one of my sister's name. We mentioned in the agreement that she shall be selling the house property and divide the proceeds(sale consideration) among others equally (which she did). To avoid tax liability, I bought NHIA Bonds(u/s 54EC). To file IT Return(FORM2), I'm required to mention the 'dt. of acquisition of property', but my name doesn't appear on any legal document. Q.1- Am I not eligible for exemption and the proceeds received from sister will be treated as gift? Q.2. did I not acquire any property?

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2 Replies

Ruchi (CA) (1410 Points)
Replied 04 June 2016

The very fact that you have to enter into an agreement to let your sister get selling rights on the property means that you rightfully had the rights over the property originally.

If the agreement says that you are transferring the property in your sister's name subject to the condition that she shall give you your share of sale proceeds then definitely it is not a gift.

Hence you are eligible for exemption and you did acquire the property.

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 04 June 2016

As your father died without any will that means all his four daughters were joint owners in equal proportion.
And as you sisters have entered into an agreement transferring the property to one of your sister and agreeing to share the sale proceeds on transfer of property that means other 3 sisters relinquished their right in property and can enforce the claim in sale proceeds of such property. Hence without any doubt you have rights over property and can claim deduction u/s 54EC. No question of gift arises in this case.