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


    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


    Please enter your comment!
    Please enter your name here

    Related Posts

    Latest posts

    The Rising Trend of Fractional Ownership in Real Estate

    Fractional ownership is transforming the Indian real estate market, offering retail investors an opportunity to participate in high-value...

    Karnataka Realty Amendment Spurs Concerns over Infrastructure Strain

    Amidst opposition protests, the Karnataka government passed the Karnataka Town and Country Planning (Amendment) Bill. This bill allows...

    NBCC to Develop 13,500 Flats in Amrapali Projects

    State-owned NBCC announced on Thursday its plans to develop an additional 13,500 flats across five ongoing projects of...

    Polls and Property – Seizing the Election Opportunity in Real Estate

    - by Akash Pharande, Managing Director - Pharande Spaces As India gears up for its upcoming general elections, optimism...