LT Capital Gain Exemption Section 54
We have made an agreement to sell our ancestral house. The property stands in my and my grandmother's name. The sale will entail significant long term capital gains for which we plan to take exemption under Section 54 of IT Act. We plan to purchase a plot and then build a house within one year so Section 54 will certainly be triggered. Both me and my grandmother only own one residential property and have not availed of Section 54 previously.
So far so good. However the prospective buyer for our joint property is requesting that both joint owners of the house (me and my grandmother) should individually make several registries in different dates for the residential house. He is likely trying to stay under the radar for Income Tax authorities and wants to make as many as six/eight individual registries in different names with the different registries spaced by a few days.
Honestly I am stymied by this request and don't know what to do.
I am quite concerned that
a) Is transferring part shares of a joint property legal or will the tax/law agencies frown on this practice. Will I be held accountable each joint owner were to individually transfer say 1/8th share of property in one individual name in one registry to be followed by seven other registeries spaced by one week.
b) Will this impact our plan to take exemption under Section 54. In other words will Section 54 be applicable to the sale of the entire property or will it be triggered in the first instance when 1/8th share of the house is transferred under the first registry.
Hope to get your expert comments soon.