KASI VISWANATHAN SRIDHARAN,CHENNAI vs. ITO, INTNL TAXN WARD-2(2), CHENNAI

The assessee and his brother, Mr. K. V. Seetharaman become the owner of the property through a Will dated 01.06.2007 executed by Mr. K.S. Viswanathan. According to the Will, Mr. K.S. Viswanathan bequeathed the said house in favour of his wife Mrs. Mangalam and she should enjoy the property in use till her life time and after her life time, her two sons, Mr. K. V. Seetharaman and Mr. K.V. Sridharan will get the absolute right equally in respect of the property. Both have sold the property on 10.04.2019 i.e., immediately after one year from the date of transfer of ownership rights. Therefore, the Assessing Officer came to a conclusion that the claim made by the assessee as long term capital gain was denied and assessed as short term capital gains.

The assessee carried the matter before the ld. DRP and it was submitted that the assessee’s father wrote a Will in the name of the assessee as well as his brother on 01.06.1987 and life time interest were created in the name of assessee’s mother Late Smt. Mangalam and she retained the same till her demise on 02.04.2018. Thereafter, the interest in the subject matter of the property retained back by both the assessee and his brother from the date of which the Will was executed i.e., on 01.06.1987. The said property was then sold on 10.04.2019. Therefore, the claim of the assessee is that the sale consideration received by the assessee was stated to be treated as long term capital gain. This argument was accepted by the ld. DRP.

However, in order to claim the exemption under section 54F of the Act, the assessee was asked to furnish various details such as, sale deed for the purchase of the residential plot, completion certificate from the jurisdictional municipality or local body with regard to constructed house building, electricity connection proof, water supply connection proof, property tax payment receipt, etc. However, the assessee failed to submit none of the above documents.

Before us, the ld. Counsel for the assessee has submitted that he is ready to fill all the details and prayed that the issue may be remitted back to the Assessing Officer to consider his case under section 54 of the Act.

On the other hand, the ld. DR fairly accepted that this issue may be remitted back.

We have heard both the sides, perused the materials available on record and gone through the orders of the Assessing Officer as well as ld. DRP including paper book filed by the assessee. The main issue involved in this appeal is whether the sale proceeds received by the assessee has to be taxed under the head long term capital gain or short term capital gain. The subject matter of the sale of the property, the assessee has acquired the rights in the property through a Will dated 01.06.1987 along with his brother. The only condition was that the mother of the assessee had life time interest and it does not mean that the assessee have any interest. By considering the interest of the assessee in the property from the date on which her mother expires on 02.04.2018 and the sale happened on 10.04.2019, the assessee came to conclusion that the assessee was liable for long term capital gain. However, in the draft assessment order, the Assessing Officer has considered that the transaction can be treated as short term capital gains. After considering the submissions of the assessee and facts of the case, the ld. DRP has categorically considered and held that the transaction should be treated as long term capital gain. Since, the father of the assessees has executed the Will on 01.06.1987, though with a condition, considering the entire facts of the case, we are of the opinion that the transaction should be treated as long term capital gains.

With regard to the claim of exemption under section 54 of the Act, since the ld. Counsel has prayed for one more opportunity for furnishing complete details, we remit the matter back to the file of the Assessing Officer to afford one more opportunity to the assessee to furnish complete details to substantiate his claim and after verification of the same, the Assessing Officer shall decide the issue in accordance with law.

So far as TDS credit is concerned, this issue has not been properly emanating from the assessment order as well as in the directions of the ld. DRP. Accordingly, we direct the Assessing Officer to reconsider the issue and pass speaking order by affording sufficient opportunity of being heard to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 22nd December, 2023 at Chennai. (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER Chennai, Dated, 22.12.2023 Vm/- आदेश की "ितिलिप अ"ेिषत/Copy to: 1. अपीलाथ"/Appellant, 2.""थ"/ Respondent, 3. आयकर आयु"/CIT, 4. िवभागीय "ितिनिध/DR & 5. गाड" फाईल/GF.