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Is reinvestment of LTCG in the name of son only eligible for capital gains exemption?

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DEEPAK

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34 Points Posted on 13 August 2021

In an assessee-friendly ruling, the Income Tax Appellate Tribunal (ITAT), Delhi bench has recently allowed capital gain exemption under section 54 of the Income Tax Act, 1961 to the assessee for the purchase of new property in the name of his son’s name. The Tribunal, while delivering the order, observed that the exemption is allowable since the capital gain from the sale of the old asset was used for investing in the name of a person who has a direct relationship with the assessee.

In this case, should assessee purchase a new property jointly with son or can it be purchase by son only to claim ltcg exemption?

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Quick Summary

The Income Tax Appellate Tribunal (ITAT) has ruled that reinvesting Long Term Capital Gains (LTCG) into a new property purchased in a son's name can be eligible for capital gains exemption under Section 54. The tribunal's decision was based on the direct relationship between the assessee and the property's new owner. While the ruling allows for this, it's generally advised to purchase the new property jointly with the son to mitigate potential future disputes.