2017 (4) TMI 1093 - AT - Income Tax

Appellate Tribunal rules sale of jointly owned property as capital gains, not other sources income.

Dipti N Khemani Versus ITO 25 (3) (2), Mumbai

The Appellate Tribunal disagreed with the decision of the Ld. CIT (Appeals) to treat the entire sale consideration as income from other sources. The ... Assessment of capital gains as income from other sources - co-ownership - Held that:- The facts borne out from the record before us shows that the Assessee along with her husband purchased the said property in question and sold the same. Therefore the joint ownership of the property cannot be denied. To this extent we agree with the Ld. CIT (Appeals). CIT (Appeals) having observed that when a property is owned it definitely attracts capital gains and has to be borne by the owner or co-owner in proportion to their respective shares, the decision to affirm the order of the Assessing Officer in assessing the entire sale consideration under the head income from other sources is not correct. Therefore, we hold that the sale consideration received by the Assessee from the sale of the property should be assessed under the head income from capital gains only. From the record placed before us, we find that the subject property was purchased by the Assessee in the joint names of the Assessee as well as her husband vide agreement dated 15.05.2001 from Sheth Developers Ltd. for a sale consideration of ₹ 9,05,625/- and the said flat was sold by the Assessee vide agreement for sale dated 23.10.2008 to Mr Raju Soni & Mrs Shobhana B Soni for consideration of ₹ 36,51,000/-. In the circumstances, the Assessing Officer should compute the long term capital gains instead of assessing the entire sale consideration as income from other sources. Thus, we restore this issue to the file of the Assessing Officer to compute the capital gains in the hand of the Assessee as well as in the hands of the co-owner of the property i.e. the Assessee’s husband. Appeal of the Assessee partly allowed for statistical purpose Issues:1. Assessment of capital gains as income from other sources.Analysis:The appeal was filed against the order of the Ld. CIT (Appeals) for the assessment year 2009-10. The Assessee contended that the assessment of capital gains as income from other sources was erroneous. Despite multiple notices issued to the Assessee, there was no representation except on a couple of occasions. The Assessee denied purchasing the property in question, leading to the Assessing Officer treating the sale consideration as income from other sources due to non-submission of required documents. The Ld. CIT (Appeals) upheld this decision, stating that the Assessee failed to prove ownership of the property. The Assessee's husband also did not declare the capital gain in his return. The Ld. CIT (Appeals) affirmed the addition, leading to the dismissal of the Assessee's appeal.The Assessing Officer determined the Assessee's income at a higher amount based on the sale of a property for a specific sum. The Assessee did not provide the necessary documents or capital gain computation despite repeated requests. The Ld. CIT (Appeals) sustained the Assessing Officer's decision, emphasizing that the Assessee could not establish that the property belonged to her husband. The joint ownership of the property was acknowledged, but the Ld. CIT (Appeals) incorrectly assessed the entire sale consideration under income from other sources.The Appellate Tribunal disagreed with the Ld. CIT (Appeals) regarding the assessment of the entire sale consideration as income from other sources. The property was jointly owned by the Assessee and her husband, and the sale consideration should be assessed as income from capital gains. The case was remanded to the Assessing Officer to compute the capital gains for both the Assessee and her husband, providing them with an opportunity to be heard. Consequently, the Assessee's appeal was partly allowed for statistical purposes.