No exemption under section 54F for husband on house purchased by wife from her funds
Facts and Issues of the case
The assessee Dilip B.Mundada sold a property on 30.03.2013 for Rs.1, 51, 00,000/-. The assessee claimed to have purchased two flats, one flat under his name (Flat No. 402) and one flat under his wife, Mrs. Uma Mundada’s name (Flat No. 401). The assessee had claimed deduction u/s 54F in the computation of Long Term capital gain. The Assessing Officer allowed the claim of the assessee only for flat in his own name.
Observations by the court
The court heard both the parties, perused the records. It is a fact that the assessee had sold a property for Rs.1, 51, 00,000/- and there was capital gain on said transaction. The assessee claimed 54F benefit.
The Flat No.401 was admittedly purchased vide registered Purchase Agreement for total consideration of Rs.40, 00,000/-. The stamp duty and registration charges had been paid by Mrs. Uma Mundada on the total value of Rs.40, 00,000/-. Thus the Flat No.401 has been registered in the records of Registrar of Properties in the name of Mrs. Uma Mundada
Admittedly the Flat No.401 is registered in the name of Mrs. Uma Mundada. Mrs. Uma Mundada is an independent assessee and in the Purchase Agreement her occupation is mentioned as Household and Business. Mrs. Uma Mundada is partner in a firm and has earned income from the firm. Thus it is an admitted fact that Mrs. Uma Mundada is an independent person having business. She had a bank account in Mahesh Sahakari Bank, Nanapeth Branch. This bank account is in her own name and type of account is “individual”.
To have an effective purchase the name of the person must be mentioned in the document. In this case the purchase agreement is in the name of the wife of the assessee who is an independent assessee earning income independently.
For availing the benefit of deduction u/s 54F the new asset shall be purchased in the name of the assessee. Applying the said proposition of law to the present case, we hold that the Flat No. 401 is not in the name of the assessee; hence it is not eligible for exemption u/s 54F of the Act. The section 54F does not say that the assessee shall invest in the new house but it says the assessee shall purchase new house. Therefore, even on this ground the rejection of claim of section 54F for the Flat No. 401 is justified.
Therefore, we hold that the Assessing officer has rightly restricted assessee’s claim for deduction u/s 54F for Flat No.402 only. Accordingly, grounds of appeal raised by the assessee are dismissed.
Conclusion
A husband cannot claim exemption under section 54F for a capital gain on a house property purchased by wife with her own funds.
Dilip-B.-Mundada-Vs-Dy.CIT-ITAT-Pune
