exemption under section 54

[Rakesh Bansal]

Dear Sir,

The query is regarding the claim of exemption under section 54 in the case of the HUF.

Q No.1.Can an HUF claim exemption by investing the sale proceeds for purchase of residential house in the name of the all the members of the HUF insteadaed of Karta.

Q No.2. Can the HUF claim exemption u/s 54 for investment for purchase of more than one residential houses separately in the name of the members to provide them separate dwelling unit.

[CAGOPALJI AGRAWAL]

To my view. the property must be purchased in the name of HUF only since under the income tax, individual and HUF are two different persons. If the capital gains arise in the hands of HUF,  the investment must be in the name of HUF. Of course the Karta would execute the transfer documents on behlaf of HUF.

 

HUF can purchase more than one property out of capital gain but again in its own name and not in the name of members.

[Rakesh Bansal]

Sir, my next question is whether the HUF will be eligible to claim exemption in respect of all the houses or any one out of all.

[CAGOPALJI AGRAWAL]

for all the houses.

AI Summary

Capital gains exemption applies when an HUF acquires replacement residential property in its own name; multiple houses qualify. Capital gains exemption is available to an HUF only when the replacement residential property is acquired in the name of the HUF; the Karta may execute transfer documents on behalf of the HUF. The HUF may purchase more than one residential property out of the capital gains and claim exemption for those properties, provided title is vested in the HUF.