01 June 2011
assessee sold his residential house and purchased another residential house in same financial year. my query is instead of purchasing new residential house on his name he purchased on name of his spouse and also that too in partnership with 3rd person. does the assessee is eligible for exemption u/s 54? if yes amt? if no than what will be the treatment?
02 June 2011
THE ISSUE IS FULL OF DOUBT AND IS A CONTENTIOUS ONE The Madras High Court in CIT v. V. Natarajan (2006) 287 ITR 271 (Mad), held that where on the sale of residential house, the assessee had purchased house for residence within the stipulated period though it was in his wife’s name, yet the assessee was held entitled to exemption under section 54 of the Act. In Prakash v. ITO (2008) 24 (I) ITCL 297 (Bom-HC) : (2009) 312 ITR 40 (Bom) IN CONNECTION WITH SECTION 54F THE BOBAY HIGH COURT HELD AGAINST THE ASSESSEE GIONG BY THE LANGUAGE OF SECTION 54 THE NEW HOUSE SHLD BE IN THE NAME OF ASSESSEE
06 June 2011
Yes, the client can take exemption by purchasing a new house on his wife's name. However, if the property is purchased with the share of another person, then exemption will be available on the share of property she/he invested for his amount as per the partnership deed.
However, as per the Manoj Gupta reply, sec 54 exemption is available even if the property is purchased with wife's name.
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