Capital gain - proceeds for purchasing a new house

firstly you need to arrive at the vsluuif the old house that needs to be sold in order to know the cost of acquisition.
Secondly the new house shud be purchased in the name of the freind only else he wud not get exemption under section 54. his wife name can be added as a second owner. he will have to file return for showing capital gains.

As per case of Shri kamal wahal court decision .
It thus appears to us that the predominant judicial view, including that of this Court, is that for the purposes of Section 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. It is moreover to be noted that the assessee in the present case has not purchased the new house in the name of a stranger or somebody who is unconnected with him. He has purchased it only in the name of his wife. There is also no dispute that the entire investment has come out of the sale proceeds and that there was no constribution from the assessee's wife.

is the same judicial ruling applicable for section 54 as well because assessee is claiming exemption under section 54 since he's selling old house and purchasing new house

This Court in the decision cited alone also noticed the judgment of the Madras High Court (supra) and agreed with the same, observing that though the Madras case was decided in relation to Section 54 of the Act, that Section was in pari materia withSection 54F. The judgment of the Punjab and Haryana High Court in the case of CIT Vs. Gurnam Singh : (2014) 327 ITR 278 in which the same view was taken with reference to Section 54F was also noticed by this Court.

Thanks for your prompt response. I am obliged. Shall advise my friend to buy a new flat in joint name with the proceeds, of course he will have to file a return for the benefit of exemption. Thanks again

GR Babu

 

If not in joint name, your friend can keep his wife as nominee