Exemption - Long term capital gain

[Guest]

assessee sold house property for rs 25lacs and earned long term capital gain of rs 14 lacs and invested rs 16 lacs in new house property in the name of his wife .in his books of accounts he showed this investmentas purchaseof new house. Whether this investment qualifyfor exemption of long term capital gain.

[Surender Gupta]

Yes, there is no conditin in the provisions of section 54 that new house should be registered in the name of assessee. It is sufficient that assessee has purchased new house. You shall be entitled to claim exemption even if this house is registered in the name of his wife.

[CAGOPALJI AGRAWAL]

Yes, agreed with the view of Surender Ji. Benami Transaction Act exempt this relation.

[Surender Gupta]

In additions to the submission earlier, it is submitted that, under section 54F, investment in the name of legal heir was denied by the Bombay High Court in the matter of PRAKASH (by legal heir of assessee) Versus ITO & CIT AND OTHERS [2009 -TMI - 33351 - BOMBAY HIGH COURT] on the other hand, in respect of exemption under section 54, the exemption was granted by the ANDHRA PRADESH High Court in the matter of, Late Mir Gulam Ali Khan (by Legal Representative Mrs. Noor Begum Versus Commissioner Of Income-Tax [2008 -TMI - 25937 - ANDHRA PRADESH High Court]

AI Summary

Capital gains exemption: purchase of replacement house in spouse's name can qualify for relief, subject to case law distinctions. An assessee who purchased a replacement residential property in his wife's name may claim exemption under Section 54 for long term capital gains because the provision does not mandate registration in the assessee's name; benami considerations do not automatically defeat the claim. However, contrasting case law shows exemption was denied under Section 54F for acquisition in a legal heir's name while exemption was upheld under Section 54 in another matter, so outcome depends on the specific provision and facts.