Sold house, bought Rs 1.10 cr flat with wife; I-T dept rejects exemption for half amount
The Income Tax Appellate Tribunal in Mumbai ruled in favor of a taxpayer who was denied a capital gains exemption because his new property was jointly owned with his wife. The tribunal determined that the investment of sale proceeds into a joint property still qualifies for tax relief under Section 54.
Why it matters
This ruling provides clarity for taxpayers regarding joint property ownership and capital gains tax exemptions in India.
You sell a property and reinvest the money you get from the sale in another property, and claim capital gains exemption in your income tax return. The catch however is that the property you buy as a replacement is jointly owned by you and your wife.And the Income Tax Department disallows a part of the exemption claim because of that. What do you do? In one such case the Income Tax Appellate Tribunal (ITAT) Mumbai has provided relief.What the case is aboutA man sold his residential property and invested the proceeds in another flat in Mumbai. The replacement property was jointly registered in his and his wife's names, with the total investment of around Rs 1.10 crore.
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