HUF Related Capital Gain

[M Saran]

Dear Netizens ,

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

An ancestral house is sold by a person on his name situated in a Village. The sale proceeds is received through an account payee cheque in the name of his two sons.

Can the person who sold the House claims that it is a partition of HUF but no PAN no is allotted to the person in capacity f karta. 

Is any capital gain provisions attract to said persons or his sons.????

[Rama Krishana]

HUF property would remain taxable in the hands of HUF on transfer.

Exemption u/s 54 can be availed by the HUF only.

AI Summary

HUF capital gains: exemption for reinvestment in residential property is available only to the HUF when HUF property is transferred. Property that is HUF property remains attributable to the HUF for tax purposes on transfer; consequently, capital gains arising from its sale are taxable in the hands of the HUF and the capital gains exemption for reinvestment in residential property can be availed only by the HUF, not by the individual seller or his sons, unless a valid partition has effectively changed the asset's character.