ITAT Mumbai Allows Taxpayers with Multiple Co-Owned Homes to Claim Tax Benefits on Capital Gains

    Date:

    Share post:

    Taxpayer co-owning more than one home can claim benefit: ITAT, ET RealEstate MUMBAI: The Income-tax Appellate Tribunal (ITAT), Mumbai bench, has held that co-ownership in more than one residential house will not debar the taxpayer from claiming tax exemption on long-term capital gains. This decision, given in the context of Section 54F of the Income-tax (I-T) Act, will benefit several taxpayers, as typically in large families investments are made in joint names. On sale of capital assets (other than a house property), say sale of jewellery or shares, the taxpayer can claim a tax exemption on the resultant ‘long-term’ capital gains under Section 54F. If the entire net sale consideration is invested in purchase or construction of a house property within the specified period, no tax liability arises. If only part of the sale consideration is invested in a house property, the tax exemption is allowed proportionately. One of the eligibility conditions prescribed under Section 54F is that the taxpayer should not own more than one residential house as on the date of sale of the long-term capital asset. In other words, the only house that can be owned is the one brought or constructed and against which the exemption is being claimed.

    In the case of Zainul Ghaswala, adjudicated by the ITAT, the I-T official had denied a significant exemption claim made by the taxpayer under this section. In this particular case, the taxpayer’s father together with five other family members had inherited land on which six flats were constructed. Ghaswala submitted to the I-T officer that each member was owning and occupying one flat each. He submitted electricity bills and confirmation letters from the owners of other flats that none of them had any rights/interest in each other’s flats. These submissions were disregarded by the I-T officer, who held that since Ghaswala jointly owned six residential properties, the conditions prescribed in Section 54F were not met. The ITAT bench had to decide on whether co-ownership in more than one residential property would result in a taxpayer being ineligible to claim the tax benefit under Section 54F.

    The Madras high court, in the case of Dr P K Vasanthi Rangarajan, had held that joint ownership would not stand in the way of claiming exemption under Section 54F. In the absence of any adverse decision by the jurisdictional (i.e. Bombay) high court, the ITAT bench placed reliance on this order and passed a verdict in favour of the taxpayer. Rewrite this article assuming the role of digital journalist with suitable headline to be free of Plagiarism.

    Also Read : Income Tax Benefits For 1st Time Home Buyers In 2021

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    Related Posts

    Latest posts

    India’s Office Space Absorption Jumps 30% in First Nine Months

    India’s office space absorption surged 30% year-on-year in the first nine months of 2024, reaching 55.1 million square...

    India’s Retail Leasing Soars in Q3 2024

    Retail leasing reached 1.6 million square feet in the third quarter of 2024, with Hyderabad, Delhi NCR, and...

    Brigade Group Signs Deal To Develop Residential Project in Chennai

    Brigade Group has entered into a joint development agreement to build a 1 million square feet residential project...

    Global Construction Leaders Join Big 5 Global LiveableCitiesX Speaker Line-Up

    His Excellency Robert Beugré Mambé, Prime Minister of Côte d'Ivoire to speak at the LiveableCitiesX Summit discussing the...