Section 54f benefit if one property is gifted

When in March 2015 you GIFTED your share in property to your wife, you have affected transfer of your share and hence there is a capital gain.

But as per S.27. For the purposes of sections 22 to 26

(i)  an individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married daughter, shall be deemed to be the owner of the house property so transferred;

Since you already have 1 residential house property and a share in another house property.

Courts have allowed exemption u/s 54 /(F) even for acquiring share in house property. Applying that , it can be said you own more than 1 residential house property and hence you can not claim the exemption u/s 54F.

CIT Vs. Chandanben Madanlal (245 ITR 182) (Guj), Held that purchase of a share in the residential house is equivalent to purchase of residential house for the purpose of sec. 54.

A good read reading

 ITO Vs. Ms. Apsara Bhavana Sai

ITA No. 557/Hyd/2012

However you may opt exemption u/s 54EC or 54GB

Hi Z,

  Thanks for your reply. I have given my share to my wife out of love (she supported me when I had no money) which happened in 2014-15 financial year .

My capital gain is from another source on 2015-2016 financial year. Legally I own only one property as of capital gain date.  I know this is a matter of litigation . A little more clarity will help me to understand this

Regards

Shibu

Sir I can understand it but for income tax purpose you will be deemed to be the owner of the property. One can say that in general law she is now the owner but since you want to claim exemption under income tax Act, you will have to comply with its provisions.

As per S.27 (as cited above) , if any house property is gifted to spouse for INADEQUATE CONSIDERATION then such a property remains to be vested with the transferor (for income tax purpose)

Also note that S.27 is a deeming provision.

Now you have one residential property solely in your name and you hold a share in the property (although in name of wife)