Exemption u/s 54 of income tax act

Tax queries 157 views 7 replies

Jasleen

Proprietor

27 Points Joined February 2014

Dear members, I have a query. Sale of old flat & purchase of a new one for capital gains exemption u/s 54.

Issue - The new house is within an apartment complex wherein flat buyers are treated as shareholders and not as owners. Flats are not registered and owners don't have titles in their names nor individual khatas. They get only a share certificate instead of occupancy certificate. Since the owners are shareholders, BBMP (Bangalore) identifies them as tenants. There are no registration charges nor stamp duty. Whether the new purchase is eligible for claiming exemption u/s 54 given that share certificate is proof of ownership? IS share certificate treated as valid title to the property for claiming this exemption?

Replies (7)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

210505 Points Joined July 2016

Is society registered under any co op housing society act?

If yes, then it will be treated as deemed ownership, and exemption u/s. 54 will be allowed.

Jasleen

Proprietor

27 Points Joined February 2014

It is not a co-operative society. Its built by a pvt ltd company who is still the owner. It issues share certificate to flat buyers.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

210505 Points Joined July 2016

Without valid transfer document title of the property itself is in question.

Without any approved organization, the authenticity of share certificate is again in question.

AO may disallow any such exemption claimed without title of the property.

You may consult a tax consultant in nearby area, for more clarification.

Jasleen

Proprietor

27 Points Joined February 2014

Ok. Thanks for your response Sir. So, the pvt ltd company who built the apartment complex is a registered and a big company. Dispute is going on with the High Court to allow individual flat owners to become khata holders. Till then, they have share certificate. Does this not enable them to be called owners?