Now capital gain deduction shall be allowed to wife towards House purchased in Husband’s Name


The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the wife is eligible for deduction under section 54 of the Income Tax Act for the investment in a house in the name of her husband.

Facts of the Case:-

In this case, the assessee had sold 76 cents of land at Tharanallur village, Trichy on 25.02.2008 and re-invested the amount in another house as per the condition as defined under section 54 of the Income Tax act 1961, which was purchased in the name of her husband. The authorities denied her claim for capital gain deduction under section 54 of the Income Tax Act ITAT for the reason that the re-investment was not made in her own name.

Interepretation and Conclusion:-

The Income Tax Appellate Tribunal noted that there is no dispute with regard to the fact of making reinvestment in the new property. The only dispute is that reinvestment in new property has been made by the assessee in the name of her husband instead of in her name.

This is the sole reason for denial of exemption under Section.54F of the Act. We find that the Hon’ble jurisdictional High Court in the case of C.I.T Vs. V. Natarajan reported in 287 ITR 271 (Mad.), which has been heavily relied upon by Ld. A.R. before us, had held as under:- “Ïn the instant case, the assessee purchased a house property at Anna Nagar in the name of his wife Smt. Meera after selling a property at Bangalore, but the same was assessed in the hands of the assessee. Hence, as correctly held by the learned CIT(A) as well as by the Tribunal, the assessee is entitled to exemption under Section.54F of the Act. Respectfully following the aforesaid decision, we hold that even though the new property has been invested in the name of assessee’s husband, an exemption under Section.54F cannot be denied to the assessee.

We direct the A.O. accordingly. The grounds raised by the assessee are disposed of in an aforesaid manner,” the Tribunal said.

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