No Tax Relief for Sale of Old House If New One purchased in Wife & Daughters’ Name: ITAT

The Income Tax Appellate Tribunal (ITAT) Mumbai bench has held that no tax relief under section 54 can be granted to the assessee for the sale of an old property if the new property was purchased in the name of his wife and daughter. The assessee sold his old residential property and purchased a new one in the name of his wife and daughter and claimed tax relief under section 54 of the Income Tax Act while filing returns.

The Assessing Officer denied the claim of the assessee and assessed 50% of the long-term capital gain at the hands of the assessee. As per Section 54 sub-section (1) of the Act, the capital gain derived by the assessee from the sale of the original asset if invested by him in the purchase of a new asset within the stipulated period would be eligible for deduction under the said provision. 

The Tribunal noticed the decision of the Bombay High Court in the case of Prakash interpreted the said provision and held that for claiming deduction under the aforesaid provisions the new house property must be owned by the assessee and/or having legal title over the same.

Tribunal held that since the purchase of new property/flat is in the name of assessee’s wife and adult daughter and not in assessee’s own name, the assessee is not eligible to claim deduction under section 54 of the Act.

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CA Lalit Gopal Gandhi


Sudheendra and Co. LLP

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