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IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, MUMBAI
BEFORE S/SHRI B.R.BASKARAN,AM AND LALIT KUMAR, JM
./I.T.A. No.3725/Mum/2014
( / Assessment Year: 2009-10)
Shri Ashwin C Jariwala, / Income Tax Officer 14(2)(2),
302, Kalbadevi Road, Vs.
Aayakar Bhavan,
Room No.3, M K Road,
1st floor, Bulchand Estate, Mumbai-400020.
Mumbai-400002
( /Appellant) .. ( / Respondent)
./ ./PAN/GIR No. :AAQPJ7623L
/ Appellant by Shri Nishit Gandhi
/Rspondent by Shri Airiju Jaikaran
/ Date of Hearing : 17.8.2015
/Date of Pronouncement: 2.9.2015
/ O R D E R
Per B.R.BASKARAN:
The assessee has filed this appeal challenging the order dated
3.3.2014 passed by the ld. CIT(A)-25, Mumbai and it relates to the
assessment year 2009-10.
2. The assessee is agitating the assessment of Long Term Capital Gain
of Rs.6 lakhs in his hands.
3. We heard the parties and perused the record. The facts relating to
the issue are stated in brief. The AO received information that the
assessee has sold an immovable property for a sum of Rs.31 lakhs on
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1.7.2008. When enquired about the same it was noticed that the assessee
along with other co-owners has sold an ancestral property purchased by
his Grand-father and the share of the assessee in the sale consideration
came to Rs.6 lakhs. Before the AO, the assessee contended that the
capital gain is assessable in the hands of his HUF. However, the AO held
that the capital gain is assessable in the individual capacity. Since the
assessee has inherited the ancestral property, the AO took the cost of
acquisition as NIL. Accordingly, the AO assessed the entire amount of
Rs.6 lakhs in the hands of the assessee. The ld. CIT(A) also confirmed
that the capital gain is assessable in the individual capacity. However, the
ld. CIT(A) held that the cost of acquisition should be taken as the market
value as on 1.4.1981. The Ld CIT(A) estimated the market value of the
property as on 1.4.1981 at Rs.1.00 Lakh and held that the assessee would
be entitled to indexation benefit proportionate to his share on the value of
Rs.1 lakh. Still aggrieved, the assessee has filed this appeal before us.
4. The ld. Counsel submitted that the conveyance deed of the property
was executed on 31.3.2008 and the possession of the property was also
given on that date and hence the capital gain, if any, is assessable in the
assessment year 2008-09 and not during the year under consideration. He
submitted that the registration of the property was only a formality to be
complied under the Registration Act. Accordingly he submitted that the
conveyance deed though registered under the Registration Act belatedly
on 1.7.2008, it will date back to the date of execution of conveyance deed,
i.e., 31.3.2008. The ld. Counsel also submitted the capital gain, if any, is
not assessable in his individual hands, since the assessee has received only
his share from the HUF. Alternatively, the ld. Counsel submitted that the
capital gain should be computed by adopting the market value as on
1.4.1981 on the basis of valuation report furnished by the assessee. He
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submitted that there is no basis with the ld. CIT(A) for estimating the
market value as on 1.4.1981 as Rs.1 lakh.
5. On the contrary, the ld. DR submitted that the assessee has not
declared capital gain in the hands of HUF and hence the assessee should
not make such a claim at this stage. He further submitted that the
conveyance of the property would get concluded only upon completion of
registration formalities, which in this case got completed on 1.7.2008.
Accordingly he submitted that the capital gain is assessable during the
year relevant to the assessment year 2009-10. With regard to the market
value as on 1.4.1981, the Ld. DR submitted that the ld. CIT(A) was fair
enough to estimate the value of property at Rs.1 lakh.
6. We have heard the rival contentions and perused the record.
Admittedly, the conveyance deed was executed on 31.3.2008 and the
same was registered under the Registration Act on 1.7.2008. On a perusal
of the conveyance deed, we notice that the possession of the property was
also given to the buyers on 31.3.2008 and the assessee along with other
co-owners have received the entire consideration before 31.3.2008.
Hence, we agree with the contentions of the assessee that the impugned
property has been transferred during the year relevant to the assessment
year 2008-09 and hence the assessing officer was not justified in assessing
the same in AY 2009-10. The Ld A.R submitted that the registration of
deed on 1.7.2008 was only a formality and upon the registration of the
deed, the conveyance would date back to the date of execution of the
deed. We find support to the contentions of the assessee in the decision
rendered by the Hon'ble Andhra Pradesh High Court in the case of M.
Shyamala Rao Vs. CIT (234 ITR 140)(AP), wherein the Hon'ble High Court
observed that the registration of the conveyance deed relates back to the
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date on which the agreement for sale was executed in favour of the buyer
by the owner. In view of the above, the capital gain, if any, is assessable
in AY 2008-09 only.
7. The next question is whether the capital gain can be assessed in the
hands of the assessee herein in his individual capacity. We notice that the
assessee has contended before the AO that the property belongs to the
HUF and what he has received is only a share from the HUF. However, we
notice that the tax authorities have rejected the claim on the reasoning
that the HUF has not filed return of income and hence the capital gain
should be assessed in the individual hands. In our view, the approach of
the tax authorities cannot be uphold in view of the decision of Hon'ble
Supreme Court in the case of Ch. Atchian (218 ITR 239)(SC), wherein the
Hon'ble Apex Court has observed as under:-
" He (here the ITO) can, and he must, tax the right person and the
right person alone. By right person, we mean the person who is
liable to be taxed, according to law, with respect to a particular
income."
Hence, merely because the HUF of the assessee has not filed return of
income, the assessing officer cannot assess the capital gain in the hands of
the assessee in his Individual status. Since the property has been jointly
held by all the family members, the same cannot be said to belong to the
assessee in his individual status. In fact, the conveyance deed wasl also
executed jointly by all the co-owners. Accordingly we are of the view that
the assessing officer was not correct in law in assessing the share of the
assessee as capital gain in the individual status.
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8. In view of the above, we do not find it necessary to address the
other contentions urged by the assessee.
9. In view of the foregoing discussions, we set aside the order of the Ld
CIT(A) on this issue and direct the assessing officer to delete the
assessment of capital gains made in the hands of the assessee herein.
10. In the result, all the appeal of the assessee is allowed.
Pronounced accordingly on 2nd Sept 2015.
nd
2 Sept, 2015
Sd sd
(LALIT KUMAR) ( B.R. BASKARAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai: 2nd Sept, 2015.
.../ SRL , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
True copy
(Asstt. Registrar)
, /ITAT, Mumbai
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