Capital gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2012 Our flat is sold for Rs. 15.50 which was in name of my mother. I and my mom have applied for home loan (in both of our name)of Rs. 20 Lacs for a new flat, and the new flat is registered in my name only ( mother's name is not there). We have repaid our loan of Rs. 15.50 lac out of Rs. 20 Lac which my mom received from selling the above property. So, since my mom dint invest directly in new property and indirectly repaid loan, is 15.50 Lac considered her capital gain and she need to pay tax on that or repaying loan exempts her from paying tax on her income of Rs. 15.50??? Please guide me

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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08 January 2012 The Karnataka High Court in the case of DIT, International Taxation v. Mrs. Jennifer Bhide [2011] 15 taxmann.com 82 has held that neither section 54 nor section 54EC stipulates that deductions under these sections shall be available only if investment in the specified asset is made in the name of the assessee only.

The case law is available at https://www.taxmann.com/fileopener.aspx?stype=3&searchid=7940

Going by the rationale given in the case law what is important is that amount is invested in procuring new property. The property need not be in the name of the assessee.