2022 (8) TMI 943 - AT - Income Tax

Long term capital gain computation - lower authorities action disallowing his payment made to his mother for the purpose of computing long term capital gains - HELD THAT - Sale in issue dated 15.02.2012 as well as sought to place reliance on the assessee s family tree starting from the common ancestor Shri Sakharam P. Pathare. His case is that this assessee had paid the impugned sum to his mother so as to meet out the latter s share in the land sold. And that the above-stated sale deed not only comprise of this assessee as seller but also approvers and confirming parties wherein it was duly agreed with the vendee/developer that the corresponding advances received would be liable to be distributed amongst all the said parties. We find no merit in the assessee s foregoing argument. It is made clear that apart from the learned lower authorities having doubted genuineness in assessee s impugned payment claim, there is no material or stipulation in the sale deed that he had acted or sold anything over and above his own share in the land sold. Learned counsel could not refer to any clause therein that this assessee s share concerned contained any charge or encumbrance or share of his mother so as to be satisfied on a future date. Fact with this situation, we find merit in Revenue s vehement argument supporting this impugned disallowance/addition of Rs.32 lakhs. The assessee fails in his sole substantive grievance. AO has accepted identical claim of payment made by his brother and therefore, both the lower authorities ought to have been consisted in their respective stands. Mr. Joshi has also filed a catena of case law as well. I find no substance in assessee s instant latter argument once he has failed to prove the payment in issue in light of the relevant stipulation in the sale deed. Assessee appeal rejected.

Summary

Issues:
1. Disallowance of payment made to mother for computing long term capital gains.
2. Discrepancy in treatment of payment made by brother.

Analysis:

Issue 1: Disallowance of payment made to mother for computing long term capital gains
The appeal pertains to the assessment year 2012-13 under the Income Tax Act, 1961. The primary contention raised by the assessee challenges the disallowance of a payment of Rs.32 lakhs made to his mother for computing long term capital gains. The CIT(A) and the Assessing Officer disallowed this payment, asserting that it was not a diversion of income but rather an application of the sale proceeds from the ancestral land. The CIT(A) highlighted that the fundamental requirement for treating the transaction as a diversion of income was lacking, as there was no overriding title or diversion by it. The dates of the agreements and payments indicated that the contention of the appellant regarding the parents not signing without payment was unfounded. The appeal was dismissed, upholding the disallowance of the payment made to the mother for computing long term capital gains.

Issue 2: Discrepancy in treatment of payment made by brother
The assessee contended that the Assessing Officer had accepted a similar claim made by his brother, implying inconsistency in treatment by the lower authorities. However, the Tribunal found no merit in this argument as the assessee failed to establish the legitimacy of the payment in question based on the sale deed's provisions. The Tribunal rejected this contention, emphasizing that the disallowance of the payment to the mother was justified based on the lack of evidence supporting the claim. Consequently, the appeal was dismissed, affirming the disallowance of the payment made to the mother and rejecting the argument of inconsistent treatment of payments between the brothers.

In conclusion, the Tribunal upheld the decision to disallow the payment made to the mother for computing long term capital gains and dismissed the appeal on both issues raised by the assessee. The judgment was pronounced on July 27, 2022, by SHRI S. S. GODARA, JUDICIAL MEMBER at ITAT PUNE.