Section 54

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Querist : Anonymous

Querist : Anonymous (Querist)

11 June 2011 We have a property held in five names (father and four sons) jointly (Not HUF), each having a fifth share in the property. Each holder is assessed to Tax in his own right. When we sell this property and divide the sale proceeds in five equal shares, can each person purchase his individual house and will be subject to Capital Gains tax for his one-fifth share? Is there any judgement or ruling on the subject?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 June 2011 Each co-owner is entitled to avail exemption on the satisfaction of the conditions as in section 54 of the IT Act,1961.

Querist : Anonymous

Querist : Anonymous (Querist)

11 June 2011 Thanks Sir. Any authority or ruling on the subject?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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12 June 2011 Section 26 , is in relation to computation of Income from House Property which is co-owned by two or more persons. By virtue of this section each co-owner is treated as an individual owner of his share. Each co-owner is separately assessable in respect to his share in property.

In Section 54, the prescribed condition for availing the exemptions requires that the building or land app. thereto should be assessed under the head IFHP.

Now, the building in question which is being sold is not consisting of 1 residential unit but it is consisting of 5 residential units and of 5 owners.

On this logical ground, I support the view of Mr. B C. Warrier.

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