section 54

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Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2010 If an assessee sells a residential house and purchase the reseidential house from her wife name, whether exemption u/s 54 can be claimed.
If Yes, Whether A.O can treat it as Gift or Loan to wife and taxed the same under the head income from other source.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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31 December 2010 Yes, under Section 54 there is requirement of purchases, or you can say the amount has to be appropriated towards the purchase of new house.

Gift to wife is exempt U/s 56. Hence it can be not treated as income from other sources.
If the new house is being self occupied for own residence nothing can be added to Income.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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31 December 2010 If reinvestment in new residential house is in the name of wife exemption u/s 54 will be allowed to husband in view of the following decision.
CIT Vs. V.Natarajan (2006) 154 Taxman 399(Mad).

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Vivek Raju P

Vivek Raju P (Expert)
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01 January 2011 I guess purchase of the new house even if in the name of the wife will be allowed. Sec 54/54F specify that the assesse has to purchase a residential property.. but it is not specified that the property has to be purchased in the name of the assessee only. In my view it can be purchsed in the name of any person and it will suffice the requirement. There have been cases where this has been disallowed by the AO but the assessee will also have a case to present as per interpretation of the provisions

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