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Capital gain

C.Balaji (Learner) (1867 Points)

04 February 2010

Dear friends.

A sold LTCA and utilised the proceeds for purchasing a Res. HP.... 2/10th right from co-owners in which he already has 3/20th right....

can he get the exemption u/s 54F????

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5 Replies

Max Payne (employed) (2574 Points)
Replied 04 February 2010

Hi balaji,

Yes fractional ownership is recognised Its only that to enjoy the benefit of sec 54 and 54F the assessee must acquire share in the asset in his name only

1. where the assessee sold a house property owned by her and out of the sale proceeds purchased 15 per cent share in another house property owned by her husband and son, exemption was allowable even though the assessee was residing in the said house prior to purchase, and continued to reside in the same house after purchase - CIT v. Chandanben Maganlal [2002] 120 Taxman 38 (Guj.).

2. Exemption is allowable even if a share in new property is purchased - When the Act enables an assessee to get exemption from payment of tax in respect of purchase or construction of a residential house, purchase or construction of a portion of the house should also enable the assessee to claim the exemption. It is possible that a person may not be in a position to purchase the whole residential house at a time and in the circumstances an assessee might purchase a portion of the house or some interest in the house. Thus, where the assessee sold a house and from the sale proceeds purchased 15 per cent undivided share in a house property from her husband and her son, and she was earlier residing in that house, exemption under section 54 can be allowed - CIT v. Chandanben Maganlal [2000] 245 ITR 182 (Guj.).

Residential house must be in the name of the assessee only - For qualifying for the exemption under section 54F, it is neces sary and obligatory to have the investment made in residential house in the name of the assessee only. Thus, investment of sale proceeds of agricultural land by the assessee in purchasing plot and constructing residential house thereon in name of his only adopted son would not qualify for exemption under section 54F - Prakash v. ITO [2008] 173 Taxman 311 (Bom.).

https://www.thehindu.com/biz/2008/12/29/stories/2008122950061300.htm

Also u had provided a case law where fractional ownership in the first house does nt count for 54F.....

Also where assessee has a fraction of a house, he does not own more than one house property....