2016 (8) TMI 951 - AT - Income Tax

Short term capital gain - addition on account of assessing 50% of the STCG on sale of the said property in the assessee s hands - Held that - AO after reopening the assessee s case for A.Y. 2005-06 for the purpose of examining, inter alia, the investment in the said property, has in the order of assessment dated 30.11.2012 not disputed the fact that the assessee has not purchased the said property, but rather that the same was purchased by the assessee s husband, Shri Arjun Bulchandani, out of his own funds. Revenue has also not been able to controvert the factual finding rendered by the learned CIT(A), after examining documents and copies of bank statements, etc. placed before him, that even though the assessee is shown as the co-owner of the said property, the source of funds for investment in purchase of the said property is by the assessee s husband and that the property was reflected in his Balance Sheet from the period relevant to A.Y. 2005-06 (i.e. 31.03.2005) till its sale, after which the STCG arising thereon was admittedly disclosed by the assessee s husband in his return of income. In this factual matrix of the case, we concur with the finding rendered by the learned CIT(A) that the entire STCG arising on sale of the said property is to be assessed in the hands of Sri Arjun Bulchandani, the assessee s husband and not in the assessee s hands and consequently uphold his direction to the AO to delete the addition of ₹ 45,38,254/- on account of 50% STCG arising on sale of the said property. - Decided against revenue

Summary

Issues Involved:
Challenge to deletion of short term capital gain arising from the sale of jointly held residential flat.

Analysis:
The case involved an appeal by Revenue against the order of CIT(A)-2, Mumbai for A.Y. 2009-10. The assessee, a medical professional, declared income of ?55,230 for the year. The Assessing Officer (AO) observed a sale of property not reflected in the return and brought 50% of the short term capital gains (STCG) on the sale into the assessee's income. The CIT(A) directed the AO to delete the addition of ?45,38,254 made in the assessee's hands. Revenue challenged this decision, arguing that the entire capital gains on the property sale were not taxed as the husband set it off against short term capital loss (STCL) from share sales. The assessee contended that the property was purchased using the husband's funds, reflected in his Balance Sheet, and the STCG was disclosed in his return. The Tribunal noted that the husband was the source of funds for the property purchase, as confirmed by the AO in a previous assessment. The Tribunal upheld the CIT(A)'s decision, ruling that the STCG should be assessed in the husband's hands, not the assessee's, and dismissed Revenue's appeal.

In conclusion, the Tribunal dismissed Revenue's appeal for A.Y. 2009-10, upholding the decision to delete the addition of STCG in the assessee's hands.