2019 (6) TMI 237 - AT - Income Tax

Capital gain computation - co-ownership - Treating the entire sale proceeds on sale of flat as accruing and arising to the appellant - appellant was only 50% owner of the flat and the balance 50% share belonged to his mother, Malati Apte - HELD THAT - All documentary evidence clearly shows that the mother of assessee was having equal right, title and interest in the said flat. Moreover, the Collector of Stamp/Registrar also accepted the mother of assessee as one of the co-owner while registered the sale agreement in favour of purchaser. The electivity bills or the society maintenance receipt tax does not prove the title of the property, rather the transfer documents such as sale deeds etc are the only documents to prove the title over the property. However, in the present case, the assessee has shown agreement to sale, power of attorney and payment of consideration, which through the light on the right, title and ownership of the flat. At the cost of repetition, we may refer that the Sub-registrar, under the jurisdiction of which the sale agreement was registered has accepted the mother of the assessee as joint owner and paid the half of the consideration; the assessing officer in absence of adverse evidence should have accepted the joint ownership of the assessee. The assessee has clearly discharged his onus by proving the fact that assessee was joint owner of the flat along with his mother, therefore, in our view, the assessee is entitled for the benefit of LTCG. In the result, the grounds of appeal raised by assessee are allowed.

Summary

Issues Involved:
1. Determination of joint ownership of the residential flat.
2. Validity of documentary evidence submitted by the assessee.
3. Assessment of Long Term Capital Gain (LTCG) and its apportionment between the assessee and his mother.

Issue-wise Detailed Analysis:

1. Determination of Joint Ownership of the Residential Flat:
The primary issue revolves around whether the residential flat sold was jointly owned by the assessee and his mother. The assessee claimed joint ownership and offered 50% of the sale proceeds for taxation, while the Assessing Officer (AO) disputed this claim, asserting sole ownership by the assessee based on available records. The AO's investigation revealed that the flat was initially registered solely in the assessee's name, with the mother’s name added later, raising doubts about the authenticity of joint ownership. However, the assessee provided several documents, including an agreement to sale and a General Power of Attorney, indicating joint ownership. The Tribunal found that the documentary evidence, including the society's acknowledgment and the registered sale agreement, supported the claim of joint ownership.

2. Validity of Documentary Evidence Submitted by the Assessee:
The AO and the Commissioner of Income Tax (Appeals) [CIT(A)] questioned the validity of the documents provided by the assessee, particularly the agreement to sale, where the mother’s name was handwritten. The AO considered these documents as self-serving and manufactured. In contrast, the Tribunal noted that the agreement to sale was initialed by all parties involved, and the society had acknowledged the joint ownership in their records. Additionally, the Tribunal considered the certificate issued by the society to the Collector of Stamp, which confirmed the joint membership of the assessee and his mother. The Tribunal found that the documentary evidence provided by the assessee was credible and substantiated the claim of joint ownership.

3. Assessment of Long Term Capital Gain (LTCG) and Its Apportionment:
The AO included the entire sale proceeds in the assessee’s income, rejecting the claim of joint ownership and thereby the apportionment of LTCG. The CIT(A) upheld this view. However, the Tribunal observed that the mother of the assessee had also declared her share of the capital gain in her income tax return. The Tribunal emphasized that the sale agreement dated 10.06.2010, registered with the Sub-Registrar, recognized the mother as a joint owner, and the sale proceeds were equally divided between the assessee and his mother. The Tribunal concluded that the assessee had adequately demonstrated joint ownership and was entitled to apportion the LTCG accordingly.

Conclusion:
The Tribunal allowed the appeal, recognizing the joint ownership of the residential flat by the assessee and his mother. The Tribunal found that the assessee had provided sufficient documentary evidence to substantiate his claim. Consequently, the assessee was entitled to the benefit of LTCG apportionment, and the grounds of appeal were allowed. The order pronounced on 29/05/2019 concluded that the appeal of the assessee was allowed, thereby overturning the previous decisions of the AO and CIT(A).