Milind Anand Karkhanis Vs ITO (ITAT Delhi)
The assessee appealed against the order of the CIT(A) for Assessment Year 2012-13 concerning the tax treatment of proceeds received from the sale of ancestral immovable property.
The assessee submitted that he had acquired a one-third share in an ancestral property, which was subsequently sold for a total consideration of ₹34.50 lakh. He received one-third of the sale proceeds but did not disclose any capital gains in his return of income. During reassessment proceedings under Section 147, the assessee furnished documents establishing that the property was ancestral and that he held a one-third share. However, the Assessing Officer treated the assessee’s share of ₹11.50 lakh as “Income from Other Sources” without allowing indexation on the cost of acquisition.
Before the CIT(A), it was acknowledged that income arising from the sale of immovable property is chargeable under Section 45(1) as “Capital Gains” and should be computed in accordance with Sections 48, 49, and 55 of the Act. Despite this observation, the appeal was dismissed.
The Tribunal noted that there was no dispute regarding the assessee’s ownership of the ancestral property or the receipt of sale consideration. The only issue was whether the receipt should be taxed as “Capital Gains” or “Income from Other Sources.” It held that, since the amount arose from the sale of immovable property, it was taxable under the head “Capital Gains.”
