Opinion Of Eminent Legal Luminaries On Controversial Issues

Capital gains- Investment in a residential house -Property sold by HUF but purchased in the name of co-parcener.

QUERY: A property owned by the HUF was sold for ` 80,00,000/-. The new house property was purchased in the name of co-parcener (daughter). Whether HUF is entitled to get benefit under section 54F of the Income-tax Act, 1961 as co-parcener is a part of the HUF?
ANSWER: In Vipin Malik (HUF) v. CIT [330 ITR 309] the Delhi High Court held that the agricultural land which was sold of by the assessee – HUF and the flat purchased in the co-operative society was not in the name of the HUF. The flat was in the individual name of V along with his mother. To claim the benefit of section 54F, the residential house which was purchased or constructed had to be of the same assessee whose agricultural land was sold. Therefore, there was no question of section 54F of the Act.

However, the Gujarat High Court in Pr. CIT v. Vaidya Pemalal Manilal (HUF) [98 Taxmann.com 189] has held that when consideration that arose in the hands on sale of capital asset had been invested for purchase of new residential house in name of some of its members instead of the assessee (HUF) deduction u/s. 54F in hands of HUF would be permissible.
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