2022 (8) TMI 1179 - AT - Income Tax

Long term capital gain - Real owner of property - transfer of right of assessee on the subject property to Jayantilal Oswal - whether the assessee can be taxed on account of capital gain in the absence of receipt of sale consideration? - Deed of transfer sold the subject property to Jayantilal Oswal - HELD THAT - Assessee transferred her right on the said property by receiving sale consideration of Rs.51,00,000/- in favour of Jayantilal Oswal on 12-06-2009 and registered a Power of Attorney in favour of the said Jayantilal Oswal to sell that property as Power of Attorney holder by Clause E We find force in the arguments of ld. AR that it is not correct to be taxed in the hands of assessee when the same was taxed in the hands of Jayantilal Oswal. Therefore, when the assessee not received the said sale consideration of Rs.2,00,00,000/- vide registered Deed of Assignment dated 13-01-2013 and the same was received by the said Jayantilal Oswal as a consenting party which was disclosed by him under the head capital gain by Schedule 18 of his return of income, again, taxing the same in the hands of assessee is not justified. Thus, the order of CIT(A) in confirming the order of AO in taxing the assessee on account of capital gain is not justified and it is set aside. Thus, ground raised by the assessee are allowed.

Summary

Issues:
Whether the CIT(A) was justified in confirming the addition of long term capital gain in the hands of the assessee instead of another party.

The case involved an appeal by the assessee against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2013-14, where the assessee raised grounds regarding the addition of long term capital gain. The assessee, an individual deriving income from various sources, declared total income at Rs.3,22,471. The Assessing Officer (AO) issued notices for verification of capital gains consideration, leading to an addition on account of long term capital gain. The CIT(A) confirmed this addition, prompting the appeal. The assessee purchased a plot of land and subsequently sold it to a relative, Jayantilal Oswal, who further entered into an agreement to sell the property to another party. The assessee argued that the transfer of rights to Jayantilal Oswal should be considered a transfer under the Act and that as she did not receive the sale consideration, she should not be taxed for the capital gain. The argument was supported by the fact that Jayantilal Oswal had declared the entire consideration as his income for the relevant assessment year. The Tribunal agreed with the assessee's contentions, stating that since the sale consideration was received by Jayantilal Oswal and taxed in his hands, it was not justified to tax the assessee for the same capital gain. Therefore, the order of the CIT(A) confirming the addition of capital gain in the assessee's hands was set aside, and the appeal was allowed.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the addition of long term capital gain in the assessee's hands and ruling in favor of the arguments presented regarding the transfer of rights and the absence of sale consideration received by the assessee.