PRASASH KRISHNAJI APTE,PUNE vs. DEPUTY COMMISSIONER OF INCOME TAX 1(3), MUMBAI

Date of sale 10.06.2010 Rs. 41,00,000/- Fair market value as on 01.04.1980 Rs. 78,000/-, date of purchase 22.03.1980 with indexation @ 711/100 Rs. 5,54,580/- Rs.35,45,420/- Deduction u/s 54 Investment of Rs. 41,00,000 Date of investment 31.07.2010 Rs. 41,00,000/- Long term capital gain Nil 3. During the assessment, the Assessing Officer asked the assessee to substantiate his claim. The assessee filed its reply dated 26.11.2013. In the reply, the assessee stated that he has sold a residential flat jointly owned with his mother. He has destroyed all its electricity bills, society maintenance bill, as he was of the opinion that he has already sold his flat, therefore, he is not required to maintain such old record. Only last maintenance of electricity bill for June 2010 was furnished. The assessee further stated that he has handed over the original share certificate to the purchaser and copy of which is not kept. The Assessing Officer after perusal of electricity bill concluded that the bill is in the name of assessee.

On appeal before the ld. CIT(A), the action of Assessing Officer was confirmed. The ld. CIT(A) while confirming the action of Assessing Officer concluded that the name of Mrs. Malati Apte (mother of assessee) have been subsequently written on the agreement dated 22.03.1980 which is the only document reflecting the name of Mrs. Malati Apte. This document has no legal sanctity as the flat has not been sold on registered document such as sale-deed or purchase-deed. The bill issued by Municipal Authority like electricity bill, property tax does not confirm the fact that the property was jointly owned by assessee and his mother.

Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us by raising the following grounds of appeal:

The learned CIT(A) failed to appreciate the evidence establishing the joint ownership of Malati Apte, with the appellant consisting of the following (a) The Purchase agreement in which the name of Mrs. Malati Apte was included (b) The General Power of Attorney executed by the person from whom the appellant and his mother had purchased the flat, which contained an assertion by him that the flat had been sold by him to the appellant and Mrs. Malati Apte. (c) Copy of Share certificate of the Society and the memorandum of transfer which contained the name of Mrs. Malati Apte at the first instance (d) Certificate of the Society issued to the collector of stamps dated 10th December 2008 which clearly states that the purchasers were the appellant and Mrs. Malati Apte his mother. (e) The sale deed which gave rise to the capital gain, in which there was a clear assertion that after verification the purchasers were satisfied about the title of the appellant and his mother Mrs. Malati Apte.

The learned CIT(A) erred in not appreciating that while the purchase deed was a Xerox copy, the contents thereof namely the ownership of the appellant and his mother stood fully corroborated by the documents set out in the preceding ground. 4. The learned CIT (A) failed to appreciate that the co-owner, the appellants· mother had filed a return of income reflecting her share of the capital gain. 6. We have heard the submission of ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the revenue and perused the material available on record. The ld. AR of the assessee submits that during the relevant period under consideration, the assessee sold a residential flat for a consideration of Rs. 82,00,000/-. The flat was jointly purchased by assessee and his mother in 1981. In the return of income, the assessee offered 50% of sale proceeds of his share and 5 Mum 2017-Shri Prakash Krishnaji Apte. computed LTCG and paid tax accordingly. The mother of assessee also declared remaining 50% share of capital gain on the sale of said flat.

The ld. AR for the assessee also filed the copies of the following documents.

On the other hand, the ld. Departmental Representative (DR) for the revenue supported the order of lower authorities. The ld. DR further submits that the Assessing Officer as well as ld. CIT(A) considered the documentary evidence furnished by assessee. In the agreement to sale dated 22.03.1980, the name of mother of assessee was inserted subsequently i.e. after execution of agreement to sale. The agreement to sale is a type document; however, the name of mother of assessee is inserted by 8 Mum 2017-Shri Prakash Krishnaji Apte. handwriting. The document produced i.e. agreement to sale by assessee is a manufactured and self-serving document.

We have considered the rival submission of the parties and have gone through the order of authorities below. The Assessing Officer while passing the assessment order, made addition of Rs. 35,45,420/- on account of capital gain to the total income of assessee. Before making addition, the Assessing Officer noted that assessee claimed to have sold a residential flat which was jointly owned by him and his mother and 50% of sale proceeds was offered for taxation in his own hand. The assessee was asked to substantiate his claim and to prove the joint ownership. The assessee filed his reply dated 26.11.2013. In reply, the assessee stated that he do not have the electricity, society and receipts which has been destroyed. The assessee furnished the electricity bill for the month of June 2010. The Assessing Officer conducted the enquiry from the society where the said flat was situated. The society furnished the copy of share certificate in the name of predecessor of assessee (Dhananjay Hemant Kelkar) dated 01.01.1987 along with memorandum of transfer. On verification of said document, the Assessing Officer find that the flat was registered in the name of assessee only and that the name of his mother was mutated only on 06.05.2010. On issuing further show cause to the assessee on 10.01.2014, the assessee contended that original sale-deed (in fact agreement to sale) was in the name of assessee and his mother and that society by mistake registered the 9 ITA No. 4844 Mum 2017-Shri Prakash Krishnaji Apte. name of assessee only, which was rectified subsequently. The contention of assessee was not accepted by Assessing Officer. The Assessing Officer took the view that only one electricity bill was produced by assessee for the month of June 2010 which clearly states that the property was registered in the name of assessee only. The share certificate clearly indicates that flat was registered in assessee’s name only. Subsequent entry made on 06.05.2010 to accommodate the assessee to show joint ownership. The society has not filed any documentary evidence on the basis of which subsequent entry was made. The ld. CIT(A) also confirmed the action of Assessing Officer holding that while confirming the action of Assessing Officer concluded that the name of Mrs. Malati Apte (mother of assessee)

Before us, the assessee has furnished the copy of certificate issued by Collector of Stamp dated 10.12.2008 wherein the society i.e. AMEYA CHS (supra) certified that assessee and his mother Malati K. Apte was the bonafide member of the society and purchase the flat no. 17 from Dhananjay Hemant Kelkar vide agreement to sale dated 22.03.1980. Copy 10 Mum 2017-Shri Prakash Krishnaji Apte. of letter dated 26.03.1985 issued by society addressed to mother of assessee acknowledged the application of mother of assessee about the mutation/transfer of flat in her name. Copy of General Power of Attorney dated 4th August 1986 in the name of assessee and his mother, agreement to sale dated 22.03.1980 in the name of assessee and his mother is inserted by handwriting. Copy of receipt of consideration for purchase of said flat dated 17th October 1980 for Rs. 18,000/- and copy of agreement to sale for sale of the flat executed by assessee and his mother dated 11.06.2010.

On sale of said residential flat, the assessee as we1ll as her mother received equal (50% each) of sale consideration. The copy of Demand Draft/Banker’s cheques received by assessee and his mother is also placed on record. The Assessing Officer has not disputed the fact that mother of assessee offered the gain received by her on sale of said residential flat. Narrow dispute before us is if the assessee was also joint owner of the said flat. The bone of contention on which revenue as well as assessee locked their horn is the agreement to sale dated 22.03.1980. In the said agreement to sale the name of mother of assessee is inserted by handwriting and necessary corrections were made in the said document. The perusal of said agreement to sale reveals that the said agreement is initialed by seller as well as by purchaser. We have also perused the copy of agreement to sale dated 10.06.2010 of the said flat executed by the assessee and his mother in favour of purchaser namely Shilpa Samir Kushe and Samir Chandrakant 11 ITA No. 4844 Mum 2017-Shri Prakash Krishnaji Apte.

The society where the said flat is situated also acknowledged the fact that Smt. Malati K. Apte (mother of assessee) was also a bonafide member of the society. In 1985 the mother of the assessee applied for mutation of her name in the record of the society and her application was duly acknowledged. The share certificate issued in the name of original member of society was also transferred in the name of assessee as well as his mother. All documentary evidence clearly shows that the mother of assessee was having equal right, title and interest in the said flat. Moreover, the Collector of Stamp/Registrar also accepted the mother of assessee as one of the co-owner while registered the sale agreement in favour of purchaser. The electivity bills or the society maintenance receipt tax does not prove the title of the property, rather the transfer documents such as sale deeds etc are the only documents to prove the title over the property.

In our view, the assessee has clearly discharged his onus by proving the fact that assessee was joint owner of the flat along with his mother, therefore, in our view, the assessee is entitled for the benefit of LTCG. In the result, the grounds of appeal raised by assessee are allowed.