New Delhi, July 18 -- When you sell a house, you can claim exemption from capital gains tax by reinvesting the profit in another residential property. This is allowed under Section 54 of the Income Tax Act.

In Mumbai, Kavita Damani followed this rule by using Rs.3.96 crore from the sale of a property to buy a flat from her husband. However, the assessing officer (AO) rejected her claim for tax exemption, arguing that the reinvestment wasn't genuine and that the transaction was merely a way to transfer the capital gains to her spouse and not a real purchase.

However, the Mumbai Income Tax Appellate Tribunal (ITAT) ruled in Kavita's favour and allowed her the exemption under Section 54.

Kavita Damani and her husband Manoj Damani had join...