2014 (9) TMI 1233 - AT - Income Tax

ITAT directs AO to review HUF's capital gains tax, potentially deleting individual assessee's tax liability.

The ITAT set aside the ld CIT(A) order and directed the AO to verify if the HUF had been taxed for the capital gains on the land. If so, the tax on the ... Capital gain on sale of land - assessment in hands of HUF or assessee - Whether assessee received the consideration in individual capacity and not in HUF status? - HELD THAT:- We find that the ld CIT(A) has clearly made a finding that the land in question belong to the HUF and therefore tax on capital gain can be levied only on HUF and not the individual assessee. It has been brought to our notice by the ld AR that the capital gain in respect to the land in question has been brought to tax in the hands of HUF. In the light of the aforesaid submission of the ld AR, it would be fair and reasonable to direct the AO to verify the said claim of the ld AR. And in case it is found that the HUF has been taxed for the capital gain on the land in question, then the AO shall delete the same levied on the individual assessee. Therefore we set-aside the order of the ld CIT(A) and remit the matter back to the file of the AO and direct him to verify whether the HUF has been taxed on the capital gain on the land in question, and if so, the addition made on the individual assessee’s need to be deleted. Appeals of the revenue is allowed for statistical purposes. Issues Involved:Determining whether the land sold is by HUF or the individual assessee.Analysis:1. The Revenue appealed against the order of the ld CIT(A) for Assessment Year 2009-10 regarding three appeals with similar issues. The case of Narayan Singh was taken as the reference point, and the decision in this appeal would apply to the other cases.2. The grounds of appeal by the Revenue focused on the status of the assessee and whether the land sold belonged to the HUF or the individual. The AO held that the land falls under the definition of a capital asset and is liable for capital gains tax.3. The assessee claimed that the land belonged to the HUF, providing evidence of ancestral transfer. The AO requested further evidence but denied the claim due to lack of proof. The AO calculated the Fair Market Value of the land and the Long Term Capital Gains accordingly.4. The ld CIT(A) allowed the appeal, stating that the land belonged to the HUF based on the Intakal Register and the report of the Naib Tehsildar. The capital gains tax should be levied on the HUF, not the individual assessee.5. The ITAT set aside the ld CIT(A) order and directed the AO to verify if the HUF had been taxed for the capital gains on the land. If so, the tax on the individual assessee should be deleted. The appeals of the Revenue were allowed for statistical purposes.This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved and the decisions made by the authorities involved in the case.