Saving capital gains tax
This query is : Resolved
Padmanabhan Srinivasan
(Querist)
23 February 2018
Whether the Capital Gains earned from sale of house in the name of husband can be used in construction of house on the vacant site held in wife's name
Anil Verma
(Expert)
23 February 2018
Yes Tax exemption will be allowed.
A few high courts, including the Delhi high court, have taken the view that purchase of the new house in the name of the taxpayer’s spouse will also qualify for the benefit of the exemption. The courts have noted that the law does not require that the new house has to be in the name of the taxpayer—it merely requires purchase or construction of the new house by the taxpayer, which is satisfied if the funds arising from the sale of the old house are utilized for such purchase or construction of the new house.
These courts have also taken the view that since these provisions are exemption provisions, they should be interpreted in a manner to the benefit of the taxpayer, particularly when two views are possible in the matter.
However for all practical purposes, the new house, though it is held in the name of the spouse, is treated as the house of the taxpayer for income tax purposes for clubbing of income.
A few high courts, including the Delhi high court, have taken the view that purchase of the new house in the name of the taxpayer’s spouse will also qualify for the benefit of the exemption. The courts have noted that the law does not require that the new house has to be in the name of the taxpayer—it merely requires purchase or construction of the new house by the taxpayer, which is satisfied if the funds arising from the sale of the old house are utilized for such purchase or construction of the new house.
These courts have also taken the view that since these provisions are exemption provisions, they should be interpreted in a manner to the benefit of the taxpayer, particularly when two views are possible in the matter.
However for all practical purposes, the new house, though it is held in the name of the spouse, is treated as the house of the taxpayer for income tax purposes for clubbing of income.
23 February 2018
Karnataka High Court has also taken the above view in DIT Vs. Mrs. Jennifer Bhide (2011) 203 Taxman 208.
However, this is a debatable issue, proceed with caution.
However, this is a debatable issue, proceed with caution.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Accounting treatment of AMC alongwith the purchase of Laptop
- Nursery business
- GST REFUND ISSUE ON PURCHASE OF PLANT AND MACHINERY
- Condonation Request sec 119(2) b -Enhancement Limit of Leave Exemption prior to AY 2023
- TDS on Dashcam rent and allied services
- Section 269ST applicability for capital introduced by partner to his partnership firm
- Intimation under section 245
- ETDS return q4 25-26
- Tax on Amount transferred in HUF Account
- HOW TO ADJUST CREDIT NOTE AMOUNT ?
- Import Order Cancelled.
- Working on Gold wastage during Melting of old gold jewellery
- WRONG GSTR7 ENTRIES ACCEPTED ERRONEOUSLY
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
