Sec. 54

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This query is : Resolved

Suresh N (Querist)

13 July 2012 Dear Experts,

Please clarify my doubt in giving exemption u/s 54, the husband and wife having 50% share in house property and the same was sold. In this case the Long term capital gain is taxed in both the assessee @ 50%.

After the sales, the new residential property bought in the name of husband alone. My doubt is, whether the exemption u/s 54 can claim both the assessees or it's exempted to husband alone? Sec. 54 says, the long term capital gain should be invested in purchase or construction of residential house property and not talking about title of property. The same was reflected in the case law of "CIT vs T. N. Aravinda Reddy (1979 120 ITR 460"

Please help on this. Thanks in advance

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

15 July 2012 When the original property was co-owned by the couple, why they did not purchased the new property in common name ? We can not predict the underlying reason.

However, when the LTCG are shown in the hands of both the assessees, separately, the wife can claim exemption only when she is in a position to substantiate that she has invested funds out of the LTCG received by her. That could be done by issuing cheque to the vendor directly from her account. In such a situation she can claim exemption otherwise not.
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