Tax Tips: Purchase in wife’s name valid for seeking IT exemption

Q.I have sold two immoveable properties for sale consideration of Rs 50 lakh.  One half of the sale consideration was deposited in my bank account and the other half was deposited in my wife’s bank account.  Thereafter I purchased a residential house property before the date of filing the income-tax return. The residential house was purchased in the name of my wife.  The consideration paid was for Rs 55 lakh. The consideration for the acquisition of the house was paid by withdrawal from my wife’s bank account to the extent of Rs 25 lakh which had been deposited in her bank account out of the sale consideration of Rs 50 lakh. I claimed exemption under section 54F as the entire sale consideration had been utilised by me for the purchase of new residential house. The income-tax officer has disallowed the exemption on the contention that the new residential house has been purchased in the name of my wife. I had taken up the matter before CITA who has dismissed my appeal.  I have filed an appeal before the Tribunal which is pending at the said level. Could you please guide me as to whether there is any favourable decision in this regard?

Raj Kumar, Mohali

The Madras High Court has held that the new residential house need not be purchased by the assessee in his own name.  The relevant decision is available in 154 taxman 399/287 ITR 271 (Madras). In this case the residential house was purchased utilising the funds obtained by the appellant from the sale of property owned by him.  Further, the new house was reflected in the income tax return of the appellant and thus assessed in the appellant's hand.   The High Court has held that the prominent judicial view is for the purpose of allowing exemption under section 54F of the Income-tax Act 1961, the new residential house need not be purchased in his own name.

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The Sky Heights project in in Sector 24, Panchkula, is strategically located offering seamless connectivity to Chandigarh, Shimla and Delhi Highway. Once completed, it will be the tallest twin-tower development in the city, offering unmatched views of the Shivalik Hills and Ghaggar River.

According to Manoj Gupta and Vineet Kohli, developers of the project, it offers luxury 4 BHK apartments and penthouses in a 25-storey building.

“Every residence is crafted with premium finishes and designed for spacious, comfortable living, ensuring that it stands out as a landmark of luxury and modernity’, says Gupta.

Eco-friendly construction tech

The project is in advanced stage of construction, with completion scheduled for 2028. It is being built using Mivan construction technology, ensuring timely delivery and superior quality.

At The Sky Heights, sustainability and eco-friendly construction are at the core of design philosophy. “We have integrated green building practices such as rainwater harvesting, energy-efficient lighting, and advanced waste management systems”, adds Kohli.

“We are also committed to renewable energy with the installation of solar panels that power the common areas, reducing dependency on conventional electricity. Furthermore, our Sewage Treatment Plant (STP) enables efficient recycling of wastewater, ensuring minimal environmental impact and sustainable resource usage”, informs Gupta. TNS

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Mr Proptek app promises to set a new global benchmark for digital property solutions

Buying property is not only one of the most important decisions in a person’s life, but is also the most tedious one. One has to be meticulous and cautious in selecting an area, property and a builder. For homebuyers, thus, zeroing in on a perfect premises is a time consuming process. A Tricity-based young entrepreneur has, however, taken the pain and trepidation out of the property selection and buying process, making it as simple as booking an online movie ticket.

Mr Proptek, that was launched in Chandigarh in May by Punjab Governor and UT Administrator Gulab Chand Kataria, is an AI-powered property booking platform. It not only allows the developers to sell their project inventory in a few hours, but customers, too, can book a property anywhere in the world with in minutes after checking out the location and the premises through 4K virtual walkthroughs, AR exploration and 3D interactive models.

Sharing about this new concept Aagman Bhatia, Co-founder and Chief Product Office, says the aim was, “To build something so expansive, intelligent and people-centric, that it redefined the entire real estate experience”. At the core of Mr PropTek lies the builder panel wherein the builders can upload the all the details of the project right from towers, available units to neartby amenities etc. The buyers, too, get the freedom to choose not what is left or shown by a broker but the entire inventory in an area or project as well as the floor, the view, the layout as per their preference.

The OORA AI search engine in Mr Proptek allows the customers to crosscheck builder background, nearby grocery stores, malls, schools, hospitals etc and even book an Uber in case they wish to visit the site physically.

“Customers can book property by paying a nominal token amount (.1% of the cost). And once the booking is finalised with the builder, this token amount is fully refunded makimg the process risk-free for the buyers.

“With VR, you won't just visit a property. You'll live it, breathe it, feel it. We’re not just making tech, we're making trust visual”, says Aagman. TNS

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Q.I own a plot measuring two acres for which I entered into a development agreement with a developer. However, the agreement was not registered. The ownership and possession of the plot continued to be retained by me. No consideration was received by me under the development agreement as the developer had to obtain necessary approval from the Urban Development Authority. The income-tax officer on the basis of a minimum guarantee amount which was provided in the development agreement held that the said income had accrued to me and brought the same to tax in my hands. The matter is pending before the Tribunal. Could you please guide me with regard to the pleadings before the Appellate Authorities?

Manmeet Verma, Panchkula

I invite your attention to the decision of Bombay High Court reported in 470 ITR 37 in the case of Prithvi Consultant Pvt. Ltd. vs. Dy. Commissioner of Income-tax. The facts given by you in the query are almost same as in the aforesaid case. The Bombay High Court has held that in view of the fact that the development agreement had not been registered, that the possession of the land had been retained by the assessee throughout and the necessary approvals had not been obtained by the developer, on account of which development agreement had been cancelled. The High Court considering the above aspects, has held that no income had accrued to the assessee and therefore appeal was duly allowed. You should be able to get the desired relief on the basis of the above decision.

Q.I am a senior citizen. After retirement I had purchased a residential plot measuring 200 sq yd in Ludhiana. Due to family circumstance, I could not build a house and finally sold the above plot in December 2024. This deal attracts LTCG (Long Term Capital Gain). According to the provision of Section 54F of Income Tax Act — the entire consideration is required to be utilised for construction or buying of a new residential house. I cannot go ahead to acquire any residential house as the amount available with me is not sufficient for acquisition of a new house. Thus, in light of above kindly advise if I can gift the LTG amount to my daughter or son to get exemption from leviability of tax or I have to acquire/purchase Bonds issued by the Rural Electrification corp. Ltd. within the stipulated period of date of sale.

Vipin Singla, Rajpura

The amount of long term capital gain arising on the sale of the plot can be gifted to your son/daughter. However, the gift so made will not entitle you to claim any benefit from the leviability of the tax on the long term capital gain. The exemption from leviability of tax on long-term capital gain in the circumstances given in the query, can be claimed if bonds issued by Rural Electrification Corporation Ltd. are purchased within six months of the date of sale of plot of land.