Property transfer year determination affects capital gains assessment

The Tribunal determined that the property transfer occurred in the assessment year 2008-09, not 2009-10 as assessed by the officer. It held that the capital gain should not be assessed in the individual capacity of the assessee but rather in the status of the HUF due to joint ownership. Additionally, the Tribunal found the cost of acquisition estimation by the CIT(A) to be unfounded and directed the assessing officer to delete the capital gains assessment. As a result, the Tribunal allowed the appeal of the assessee, with the judgment issued on 2nd September 2015.

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Issues:
Assessment of Long Term Capital Gain in individual capacity, Year of assessment, Cost of acquisition determination, Assessment in HUF vs. individual capacity.

Analysis:
1. Year of Assessment: The Appellate Tribunal considered the date of execution of the conveyance deed, possession of the property, and completion of registration formalities to determine the year of assessment for capital gains. It was held that the property was transferred during the year relevant to the assessment year 2008-09, and thus, the assessing officer erred in assessing it in AY 2009-10.

2. Assessment in HUF vs. Individual Capacity: The Tribunal analyzed the claim that the property belonged to the HUF and the assessee received only a share from the HUF. The tax authorities had rejected this claim due to the HUF not filing a return of income. However, citing the decision in Ch. Atchian case, the Tribunal emphasized that the assessing officer must tax the right person liable according to the law. As the property was jointly held by family members and the conveyance deed was executed jointly, the Tribunal concluded that the capital gain should not be assessed in the individual status of the assessee.

3. Cost of Acquisition Determination: The Tribunal addressed the issue of determining the cost of acquisition for the capital gain calculation. While the AO had taken the cost as NIL due to inheritance, the CIT(A) estimated the market value as on 1.4.1981 at Rs. 1 Lakh. The Tribunal found no basis for this estimation and directed the assessing officer to delete the assessment of capital gains made in the hands of the assessee.

4. Conclusion: Considering the above discussions, the Tribunal set aside the order of the CIT(A) and directed the assessing officer to delete the assessment of capital gains in the hands of the assessee. The appeal of the assessee was allowed, and the judgment was pronounced on 2nd Sept 2015.

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