Case Law Details
JCIT (OSD) Vs Shri Sujan Azad Parikh (ITAT Mumbai)
ITAT Mumbai held that long term capital loss arising out of the sale of shares and units of mutual funds on which STT was paid and covered under section 10(38) could not be set off against long-term capital gain arising out of the sale of land as per section 70(3) of the Act.
Facts- During the assessment proceedings, it was observed that the assessee has claimed to have sold a flat at Skylark Co-operative Housing Society Ltd (‘Skylark flat’) declaring a LTCG of Rs. 7,25,08,820, against consideration of Rs. 7,62,50,000, (being 50% sale consideration of the flat).
It was further observed that the ownership of Skylark flat was bestowed pursuant to decree order of the Hon’ble Court on Small Causes at Bombay in favour of the mother of the assessee, inter-alia, on condition of payment of Rs. 8.5 lakh to the Plaintiff. It was also noticed that pursuant to the aforementioned decree, the assessee along with his mother made joint representation to the Skylark Co-operative Housing Society Ltd to transfer the shares in their joint names. Pursuant thereto share certificates were transferred to the joint names of the assessee and his mother. Subsequently, in July 2007, the mother of the assessee transferred half share of the Skylark flat to the wife of the assessee. Finally, in July 2014, the Skylark flat was sold to a third-party for a total consideration of Rs. 15,25,00,050, and the assessee and his wife declared 50% of the consideration from the sale of the Skylark flat in their respective income tax returns for the assessment year 2015–16.
AO vide order dated 30/12/2017, passed under section 143(3) of the Act held that the said flat was decreed in favour of the mother of the assessee, however, without any sanction of law and based on flimsy grounds, the half share of the flat was transferred in the name of the assessee. Accordingly, the AO held that the half consideration received by the assessee amounting to Rs. 7,62,50,000, is taxable in the hands of the actual owner of the half share of the Skylark flat i.e. mother of the assessee. Further, consideration received on the sale of Skylark flat and consequent set off against such considerations/gain cannot be considered in the hands of the assessee. AO also proceeded to add the aforesaid amount of Rs. 7,62,50,000, as unexplained credit in the hands of the assessee on the basis that the aforesaid amount was received by the assessee without any ownership of any asset.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
