Rekah Devi Vs DCIT (ITAT Delhi)
In a significant verdict, the Income Tax Appellate Tribunal (ITAT) Delhi has provided substantial relief to Rekah Devi, an individual taxpayer, by overturning a major addition of INR 2,52,99,100/- made by the Assessing Officer (AO) on account of alleged long-term capital gain. The Tribunal also partly allowed her appeal concerning an addition of INR 1,68,000/- for deemed rental income. The decision, pronounced on September 9, 2021, underscores the principle that capital gains can only arise when actual consideration is received from the transfer of a capital asset.
The Assessment and Initial Additions
For Assessment Year (AY) 2012-13, Rekah Devi had filed her income tax return declaring a modest income of INR 5,747/-. However, the AO completed the assessment under Section 143(3) of the Income Tax Act, 1961, at a total income of INR 2,54,72,850/-. This substantial increase was primarily due to two additions:
1. Long-Term Capital Gain: INR 2,52,99,100/-.
2. Deemed Rent Received: INR 1,68,000/-.
Rekah Devi challenged these additions before the Commissioner of Income Tax (Appeals) [CIT(A)], but her appeal was dismissed, leading her to approach the ITAT.
The Capital Gain Dispute: Property Forfeiture vs. Sale
The core of the capital gain dispute revolved around a property located at 2501, Gali No. 8, Karol Bagh, New Delhi, belonging to Rekah Devi. Her legal representative informed the ITAT that this property was never sold or transferred by the assessee in the conventional sense. Instead, it had been mortgaged with the Indian Overseas Bank (IOB) as a guarantor against a loan taken by M/s Vikas Chain Company Pvt. Ltd.
Comments are closed.