Case Law Details
Dilip Divakaran Kanath Vs ITO (ITAT Mumbai)
ITAT Mumbai held that once whole income i.e. LTCG from sale of joint property purchased is brought to tax in the hands of assessee’s wife and claim is granted by the Coordinate bench, the same income cannot be taxed in the hands of the assessee.
Facts- The assessee and his wife, Mrs. Likhiya Dilip Kanath, jointly purchased a property in Chandivali in the year 2005 in the ratio of 50:50 for ₹.22,50,000 plus registration. Subsequently, they sold the said property in A.Y.2009-10 for a consideration of ₹.59,00,000/- and computed long term capital gain of ₹.32,65,191/-. Therefore, the Capital Gain arising out of it was to be availed by both the parties in 50:50 share. However, the assessee’s wife claimed the entire Long Term Capital Gain (LTCG) in her hand and claimed deduction u/s. 54 of ₹.32,65,191/-. However, while finalizing the assessment proceedings for A.Y. 2009-10 in the case of assessee’s wife, the erstwhile AO has allowed 50% deduction i.e., to the extent of ₹.16,32,595/-.
Subsequently in assessee’s wife appeal CIT(A) allowed 50% of the capital gain as deduction u/s. 54 of the Act for investment in purchase of new residential flats in the hands of the assessee’s wife. However, the Department has filed an appeal before the ITAT against the order of CIT(A) and that appeal is pending in the case of assessee’s wife.
Considering the fact in the case of assessee’s wife, the assessee was issued notice u/s. 142(1) of the Act to justify with supporting evidences as to why 50% of LTCG of ₹.16,32,595/- should not be taxed in his hands as assessee has not offered any income from LTCG in his return for the A.Y. 2009-10.
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