The Mumbai Income tax Tribunal has ruled that if someone ahs entirely invested in a property, then the person is eligible for geftting full incomr tax benefit on investment even if the property has been purchased in a close relative's name.
Currently, the law requires that when a property is sold after being held for more than 3 years then the seller needs to pay long term capital gain tax (LCTG) on it or claim it exempt by investing an amount equal to capital gain in purchase of another residential house. The law allows the seller to reinvest the gain amount within stipulated time irrespective of who owned the property.
In a recent case, a businessman had invested in a property alone but the property had been registered in the name of the person and his wife. When selling the property after 24 months, the assessee reinvested the LCTG in another house. The owner tried to claim exemption for the whole amount of LTCG. Instead of that. the IT department allowed him only 50% exemption. When the assessee again mentioned that he needed 100% exemption, the tax department refused. When the business moved the case to court, the tribunal allowed him 100% exemption since the investment for the property was done solely by the assessee.