Sureshbhai Ashwinbhai Patel Vs ITO (ITAT Ahmedabad)
The case of Sureshbhai Ashwinbhai Patel Vs ITO, heard by Income Tax Appellate Tribunal (ITAT) in Ahmedabad, provides crucial insights on the taxation of gains from jointly owned property. This case signifies that the entire consideration from such a sale cannot be treated as the long-term capital gain of a single co-owner.
Analysis:
The appeal, initiated by the Assessee against an order from the CIT(A), revolved around the sale of a jointly owned property. The Assessee contended that the property was co-owned with his son, Sureshchandra Ashwinbhai Patel, and thus the total consideration of Rs. 16,00,000/- from the sale should be distributed equally between them.
However, the Assessing Officer had previously considered the entire amount as the Assessee’s undisclosed income for the Assessment Year 2011-12, leading to a tax imposition. The Assessee appealed this decision, but the CIT(A) dismissed it. In his defence, the Assessee highlighted his old age and the unfortunate demise during the litigation, which hindered his response to the issued notices.
Upon hearing both parties and reviewing the relevant materials, ITAT noted the jointly owned nature of the property sold. Hence, they deemed it inappropriate to treat the entire sale consideration as the Assessee’s long-term capital gain. Furthermore, ITAT stated that neither the Assessing Officer nor the CIT(A) had verified other aspects of the case.
Conclusion:
ITAT’s decision in Sureshbhai Ashwinbhai Patel Vs ITO presents a significant precedent for future tax disputes involving jointly owned properties. Their ruling clarified that the complete sale consideration from such a property cannot be attributed as the long-term capital gain of a single co-owner. The case has been remanded back to the CIT(A) for reevaluation, thus emphasizing the importance of fair assessment in tax litigations.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the Assessee against order dated 13.01.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2011-12.
2. The Assessee has raised the following grounds of appeal :-
“1. Being aggrieved by the order of ITO Ward 4(2)(1) passed u/s.142(1), this appeal petition is being submitted on the following grounds, which are prayed and may be considered without prejudice to one another.
2. CIT(A) failed to consider the fact that House sold by Assessee is in Joint Name.The joint owner of the property is Mr. SURESHCHANDRA ASHWINBHAI PATEL.
3. The consideration of immovable property sold will be distributed in 2 parts i.e. sale consideration of property is Rs.16,00,000/-. Amount of Rs.8,00,000/- will be sales consideration of Mr. ASHWINBHAI SOMNATH PATEL i.e. assessee.
4. CIT(A) has considered the same base on which AO has charged full amount of consideration as income and charged tax. But as per Valuation Certificate, the Sold Property was purchased in 2006, the value of the same is Rs.6,83,500/- (as per Valuation Certificate)
5. CIT(A) is failed to reduce Purchase cost of year 2006 of Rs.3,41,750/-(total cost 6,83,500/- due to joint owner the cost of property in the name of Assessee will be of Rs.3,41,750/-) and without considering purchase cost of asset, CIT(A) has calculated tax.
6. The working must be after considering purchase cost of property and benefit of indexation must be given.
