S.54F: Capital gains-Investment in residential house-Exemption-Assessee purchasing residential house in
name of his wife is entitled to exemption. (S.45)
The assessee, an individual, inherited 50 per cent share in a residential house from his father.In computing the capital gains, the assessee claimed exemption under section 54F of the Acton the ground that the sale proceeds were invested in the acquisition of a vacant plot and purchased a residential house in the name of his wife. The Assessing Officer took the view that under section 54F, the investment in the residential house should be made in the assessee's name and inasmuch as the residential house was purchased by the assessee in the name of his wife, the claim was not allowable. He restricted the exemption and computed the capital gains. The Commissioner (Appeals) allowed the claim. This was confirmed by the Tribunal. On appeal by revenuedismissing the appeal,the court held thatfor the purposes of section 54F, the new residential house need not be purchased by the assessee in his own name nor is it necessary that it should be purchased exclusively in his name. Moreover, the assessee had not purchased the new house in the name of a strangeror somebody who was unconnected with him. He had purchased it only in the name of his wife. There was also no dispute that the entire investment had come out of the sale proceeds and that there was no contribution from the assessee's wife. Therefore, the Tribunal was right in law in allowing the claim of the assessee under section 54F.(A.Y. 2008-2009)
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