Judgement of the case: The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that if entire sale amount of long term capital gain have been invested in purchase of other property in the name of wife of assessee, assessee would be entitled for exemption on account of long term capital gains.
Fact of the Case: assessee has shown long term capital gain on sale of two properties i.e. Flat No. 213, DPS Apartment, Dwarka for a consideration of Rs.56,79,195/- and another property at Plot No. 1470, Sector-15, Sonepat for Rs.85,44,236/- aggregating to Rs.1,42,23,431/- for both the properties. This long term gain amount has been invested in purchasing another property in Sheetal Vihar, Sector-23, Dwarka, New Delhi for Rs.1,57,63,283/- in the name of his wife Smt. Vedmati Hooda. It was claimed by assessee during the assessment proceedings that he has fulfilled/all the technical conditions for exemption of long term capital gains under sections 54/54F of I.T. Act, 1961.
Interpretation of law and Conclusion: since the entire sale amount of long term capital gain have been invested in purchase of other property in the name of wife of assessee, assessee would be entitled for exemption on account of long term capital gains. “Whether the exemption under Section 54F is extendable to the assessee for the total consideration paid by him, for the purchase of the new asset (the residential property) in the joint name or the exemption would be entitled to the extent of the share of the assessee in the said purchased property. – Held that – When whole of the purchase consideration has been paid by the assessee and not even a single penny has been contributed by the wife in the purchase of the house, the assessee is entitled to full exemption. In CIT v. Podar Cement (P.) Ltd. (1997 (5) TMI 2 – SUPREME Court), the Supreme Court has also accepted the theory of constructive ownership. Moreover, Section 54F mandates that the house should be purchased by the assessee and it does not stipulate that the house should be purchased in the name of the assessee only. – decided in favour of assessee.”