P MURUGESAN,KARUR vs. ITO, WARD-1, KARUR

This appeal of the assessee is directed against the order passed by the Commissioner of Income Tax-1 (in short ‘’the CIT) Trichy, dated 05.10.2018 and pertains to the assessment year 2013-2014.

Smt G. Vardini Karthik, the Ld. Counsel for the assessee submitted that the assessee inherited the property on the death of his wife alongwith two of his Children. Referring to Section 15 of Hindu Succession Act, Ld. Counsel for the assessee submitted that assessee is entitled only for 1/3rd right of the property. Therefore, he is liable to pay only 1/3rd of the tax demand. However, the entire capital gains was assessed in assessee’s hand and therefore Ld. Counsel for the assessee submitted that it may be restricted to 1/3rd of the capital gains. Referring to the improvement made in the property, the Ld. Counsel submitted that there is no material proof to suggest that any improvement was made. However, in fact the assessee incurred expenditure for improving the property.

On the contrary, Shri Pavitran Kumar, the Ld. Departmental Representative submitted that the assessee offered the entire capital gains for taxation. However in the assessment proceedings, the assessee claimed that he is liable only for 1/3rd of the capital gains. Therefore, the Assessing Officer rejected the claim of the assessee and assessed the entire capital gains on his hands. As far as the improvement is concerned, there is no material filed by the assessee, hence the Assessing Officer as well as the CIT(A) rejected the claim of the assessee.

Having heard the ld. counsel for the assessee and the ld. DR, this Tribunal is of the considered opinion that under the Hindu succession Act, the assessee inherited property along with his two children. Therefore, the right of the assessee over the property is 1/3rd. Hence, the assessee is liable to pay capital gain only to the extent of his right in the property. In view of the above legal position, this Tribunal is of the considered opinion that the assessment has to be restricted only to the extent of 1/3rd of the capital gain arises out of the sale of the property. As far as improvement is concerned, admittedly there is no material filed either before the assessing officer or before the CIT(A) and no material is also filed before this Tribunal. Therefore, this tribunal is unable to uphold the claim of the assessee. Accordingly, the order of the assessing officer as confirmed by CIT(A) is modified and the assessing officer is directed to assess only 1/3rd of the capital gain in the hands of the assessee.

In the result, the appeal filed by the assessee in 2013-2014 is partly allowed. Order pronounced in the court on 7th February, 2020 at Camp at Coimbatore.