2015 (4) TMI 43 - AT - Income Tax

Share in the property sold - capital gain computation - CIT(A) held assesseee's share as 1/18th, instead of 1/6th determined by the Assessing Officer on the basis of Form 6A dated 08/11/1983 - Held that - Since assessee along with his sons had 1/6 share, Assessing Officer taxed the entire share in his hand without considering the share of his sons ignoring the fact that they had received their share of payment and reflected the sale consideration in their respective returns. The land records establish the fact that assessee along with his sons were equal owners in the said property as discussed above. The land records including the assessee's sons was of 2005 which is much prior to transfer, therefore, Assessing Officer was not justified in ignoring this evidence. Moreover, assessee s sons have disclosed their income from sale of this property in their respective tax returns including same in assessee s hand would result in double taxation. Considering these facts and circumstances, CIT(A) was justified in directing the Assessing Officer to treat the disclosed capital gain 1/18th share. This reasoned finding CIT(A) needs no interference from our side. - Decided against revenue.

Issues Involved:
1. Determination of the assessee's share in the property sold.
2. Application of indexation benefit for calculating long-term capital gains.

Issue-wise Detailed Analysis:

1. Determination of the Assessee's Share in the Property Sold:

The primary issue in this case was whether the assessee's share in the property sold should be treated as 1/18th or 1/6th. The Assessing Officer (AO) determined the share as 1/6th based on Form 6A dated 08/11/1983. However, the assessee contended that the property was ancestral and the share should be 1/18th.

The AO's assessment was based on the deed of convenience, which listed five persons as the second party and the next-generation co-owners as the third party. This led the AO to conclude that the assessee's share was 1/6th. However, the CIT(A) found that the AO ignored crucial facts:
- The 7/12 record for agricultural land listed the assessee and his two sons as owners since 21.06.2005, evidencing joint ownership.
- The conveyance deed included the names of the assessee's sons and other co-owners' sons as confirming parties.
- Sale consideration payments were made separately to each co-owner, including the assessee's sons.
- The assessee's sons declared their share of capital gains in their tax returns.

Given these facts, the CIT(A) directed the AO to treat the assessee's share as 1/18th, acknowledging the joint ownership with the assessee's sons and preventing double taxation.

2. Application of Indexation Benefit for Calculating Long-term Capital Gains:

The AO did not allow the benefit of indexation from 01-04-1981 and restricted it to the year 1983-1984, based on the date of Form 6A. The assessee claimed indexation from 1980-81, which the AO contested, leading to an addition of Rs. 38,000 for excess deduction claimed by the assessee.

The CIT(A) agreed with the AO on restricting the indexation year to 1983-1984, as the property was held by the assessee from that year. However, the main contention was the share of the property, which affected the computation of capital gains. The CIT(A) directed that the assessee's share be considered as 1/18th, thus modifying the taxable capital gains accordingly.

Conclusion:

The appeal filed by the Revenue was dismissed. The CIT(A)'s decision to treat the assessee's share in the property as 1/18th and the application of indexation from 1983-1984 was upheld. The judgment emphasized the importance of considering all evidences, including land records and tax returns of co-owners, to ensure accurate assessment and prevent double taxation.

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