Wife buys husband's Rs 7.5 crore Mumbai property, ITAT allows tax benefit
The Mumbai Income Tax Appellate Tribunal ruled that a property transaction between a husband and wife is not automatically a tax-avoidance scheme. The court allowed the wife to claim tax exemptions after purchasing a property from her husband, provided the transaction follows legal frameworks.
Why it matters
This ruling provides legal clarity on intra-family property transactions and the legitimacy of tax exemptions under specific sections of the Income Tax Act.
Buying a residential property from one's own spouse does not, by itself, make the transaction a colourable device to avoid tax, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held, allowing a woman's claim for exemption under Section 54F after she purchased a Mumbai property from her husband for Rs 7.5 crore.The tax tribunal held that the Income-tax (I-T) department could not deny the exemption merely on the basis of suspicion that the transaction between the spouses was designed to avoid tax, particularly when the transaction was carried out within the legal framework and the alleged business loss of the husband (which would help him set off the gains on sale of his flat against his losses) had arisen several months after the property transaction.The taxpayer had filed her return for the financial year 2020-21 declaring total taxable income of Rs 1.9 crore.
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