2024-04-09 05:48:33
New Delhi: It is common to include the names of husband and wife in the ownership of the flat. A recent decision of the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) will prove to be very beneficial for many people. ITAT has ruled that joint ownership will not affect the eligibility of either spouse to claim tax exemption under Section 54-F of the Income Tax (IT) Act. This section deals with long term capital gains. When a spouse sells other assets (like land, shares etc.) and invests the proceeds in another flat, he or she can avail tax benefits. When a taxpayer sells any asset (other than house property) If one earns long term capital gain from sale, the tax on it can be saved by investing in residential property. The amount of rebate available depends on the amount invested in the new house. If the amount invested is less than the amount of net sales then the discount is prorated. To claim this exemption, certain conditions must be fulfilled. One of these conditions is that the taxpayer should not own more than one house on the date of sale of the original asset. Recently S. In a case involving Singh, ITAT held that joint ownership of two residential properties at the time of sale of the original asset does not debar the taxpayer from claiming exemption under section 54F of the Income Tax Act.
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In this case, the taxpayer had sold agricultural land (i.e. original asset) in Bhopal and earned long term capital gain of Rs 61.6 lakh during the financial year 2012-13. Within the stipulated time limit he invested it in a new house and claimed exemption under Section 54F. His case was investigated and the information given by him revealed that he owned two residential properties at the time of the sale of this land. Both had joint ownership. One was her husband and the other was her father Joit Honor. Since he owned more than one house, the IT official rejected his claim.
The woman taxpayer argued that the house where she was living with her husband was jointly owned and the loan was being repaid by her husband. She was also a joint owner in HUF property. The High Court has given different decisions in such cases. ITAT said that the Supreme Court had laid down a principle that if two approaches are possible, the approach more favorable to the taxpayer should be adopted. Therefore, this provision was given that women taxpayers can claim tax benefits.