Mr Headache is a Non Resident Indian bought a house at Delhi, from original allottee in 2020. The registry and delivery of possession is given by the builder in November 2021 in the name of Headache’s wife Mrs Migraine, as the stamp duty chargeable to ladies have concessional rate for total consideration of Rs 2 cr.
Mr Headache sold his inherited house in Maharashtra in October 2022 where he made a capital gain of Rs 90 lakh chargeable to Income Tax.
He has following query
- Is it allowed in FEMA to purchase a residential house in India by an NRI?
- What are the implication of Benami Transactions Act for purchase of house in the name of spouse?
- Can he claim exemption under section 54 for purchase of house against the sale of house in Maharashtra?
The Non Resident Indian or PIO card holder can purchase residential house in India without RBI Approval.
The Benami Properties Act is not attracted as:
That as per definition of Benami in section 2A(iii) The property held in the name of spouse is not treated as Benami if the consideration is provided from known source of income of the individual.
The purchase in the name of spouse is not treated as Benami purchase.
Deduction u/s 54 is allowable to individual if property is purchased within one year before or two after the date of sale u/s 54 of the Income Tax Act. The purchase in the name of wife is permitted for deduction u/s 54 as per following Judgements:
- CIT v. Gurnam Singh 327 ITR 278 (P & H)
- CIT v. Natrajan (2006) 287 ITR 271
- CIT v. Kamal Wahal (2013) 30 TAXMANN .COM (Del)
- CIT v. Ravindra Kumar Arora (2012) 342 ITR 38 (Del)
- N.Ramkumar v. ACIT 150 TTJ (Hyd)656