2022 (10) TMI 477 - AT - Income Tax

Addition of long-term capital gain - benefit of indexation - actual beneficiary of asset - investments were made by the husband and shown in his books of account - clubbing of income - resultant capital gain was not offered for taxation on the ground that since the said property was purchased by the husband of the assessee in her name and all the funds were arranged and invested by the husband, thus he was the actual owner of the property and, therefore, resultant capital gain was offered by him in his return filed - HELD THAT - Indexation amount was payable in the hands of the assessee herself. As regards the claim of construction on the said property is concerned, in this regard the claim of the assessee is that the husband of the assessee had taken housing loan from the LIC for this purpose. From the record and the perusal of returns filed by the husband of the assessee, he has specifically shown income from SOP (being the property finder consideration here at 815, Mahaveer Nagar-I) which means this property was self occupied/vacant so to show income on notional basis means that the husband of the assessee had rental income from other property on which the loan could have been taken. CIT (Appeals) after evaluating the facts had also rightly pointed out that in the absence of any such cogent evidence that the amount claimed as loan from LIC was invested in the property at 815, Mahaveer Nagar-1, the benefit of indexation was not allowable to the assessee on this amount which initially the AO had given and the same was denied by t CIT (Appeals). While reaching to this conclusion, CIT (Appeals) has mentioned in his order that this point was never clarified by the Assessing Officer nor examined. Whereas, on the contrary, AR has drawn our attention towards loan was taken from LIC by the husband of the assessee of Rs. 8,00,000 and later on was paid off and in this respect paper book referred. It was also specifically submitted by the learned authorised representative that the balance-sheets of the various years had been enclosed showing construction in the assets side and loan from LIC in the liability side. Apart from that, the statement of repayment and repayment certificate issued by the LIC in the name of Shri Satya Narain Agarwal, husband of the assessee has also been relied upon. Though according to CIT (Appeals), AO had not examined this aspect and had not clarified the factual position by verifying or examining the abovementioned documents. Therefore, we are of the view that it will be proper to remand the matter to the Assessing Officer with the direction to verify and examine the documents relied upon by the assessee and pass order afresh. Denial of deduction claimed under section 54F - property purchased in the name of husband of the assessee - The new property situated at A-33, Jai Shree Vihar, Thekra, Kota was purchased exclusively in the name of the assessee vide Ikrarnama dated October 22, 2009 and pranam patra , i. e., land allotment letter and patta in the name of the assessee. It was also submitted that construction was carried out on the said plot and in this respect construction bills , construction account (ledger) and valuation report has also been referred. In our view, since the Assessing Officer has recorded factually incorrect findings in regard to the property purchased in the name of husband of the assessee, therefore, we are of the view that this issue also requires reconsideration at the end of the Assessing Officer. We, therefore, remand this issue also to the Assessing Officer with the direction to verify this aspect of the matter and pass order afresh. Appeal of the assessee is allowed for statistical purposes.

Issues Involved:
1. Jurisdiction and validity of the addition made under sections 147/143(3) and 144/148.
2. Enhancement of long-term capital gain and denial of deduction under section 54F.
3. Charging of interest under sections 234B and 234C.

Detailed Analysis:

1. Jurisdiction and Validity of Addition (Ground Nos. 1 and 2):
The assessee challenged the jurisdiction and validity of the addition made under sections 147/143(3) and 144/148, arguing that the action taken was bad in law and void ab initio. However, these grounds were not pressed by the assessee during the appeal, and thus, they were dismissed.

2. Enhancement of Long-Term Capital Gain and Denial of Deduction (Ground Nos. 3.1 and 3.2):
The main contention was regarding the enhancement of long-term capital gain by Rs. 10,74,200 and the confirmation of an addition of Rs. 10,06,333 made by the Assessing Officer. The assessee argued that the property sold was purchased by her husband, who also made all investments, and thus, the resultant capital gain was offered by him in his return. The Assessing Officer disagreed, stating that since the property was in the name of the assessee, the capital gain should be assessed in her hands. The Commissioner of Income-tax (Appeals) enhanced the addition by holding that the cost allowable against the sale consideration was Rs. 1,76,000, indexed to Rs. 4,29,467, and the balance amount of Rs. 20,80,533 was to be added to the assessee's income.

The Tribunal observed that the documents in respect of the house property sold were in the name of the assessee, and there was no evidence that the sale consideration was received by her husband. The property was not a joint property, and the cost of improvement claimed lacked proof. The Tribunal upheld the findings that the capital gain was required to be reflected in the assessee's return, and merely because the husband offered the capital gain in his return did not grant relief to the assessee. However, the Tribunal noted that the Assessing Officer had not examined the documents related to the loan taken by the husband for construction. Therefore, the matter was remanded to the Assessing Officer for verification and examination of the documents.

3. Denial of Exemption Under Section 54F:
The Assessing Officer denied the exemption under section 54F, stating that the new property was purchased in the name of the husband. The assessee contended that this finding was factually incorrect and that the new property was purchased in her name. The Tribunal found that the Assessing Officer's finding was incorrect and remanded the issue to the Assessing Officer for reconsideration and verification of the documents related to the new property.

4. Charging of Interest Under Sections 234B and 234C:
The assessee also challenged the charging of interest under sections 234B and 234C, amounting to Rs. 3,23,400. However, this issue was not elaborated upon in the judgment.

Conclusion:
The appeal was allowed for statistical purposes, with directions to the Assessing Officer to verify and examine the documents related to the loan taken by the husband for construction and the purchase of the new property. The Tribunal emphasized that the capital gain should be assessed in the hands of the assessee, as the property was in her name, and merely offering the capital gain in the husband's return did not grant immunity to the assessee.

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