SAVITRI ASHOK HEMDEV,MUMBAI vs. ITO 19(3)(4), MUMBAI

Brief facts of the case are that the assessee filed her return of income for the assessment year 2011-12, declaring the total income of Rs. 1,86,195/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short ‘the Act’). The return was selected for scrutiny and notices u/s 143(2) and142 (1) were served upon the assessee. Since, it was noticed that the assessee had sold immovable property during the relevant financial year, the assessee was asked to furnish full details regarding the sale transaction. In response thereof, the assessee informed that Shri. Ashok T. Hemdev, her husband being owner of a flat No. A/503, Manju Mahal, Chetak Co-operative Housing Society, made her an associate member of the society on 7.12.2003. The said flat was sold on 27.6.2010 to Mr. & Mrs. Melwani for a total consideration of Rs. 1.20 crores. The assessee, in her computation of Income mentioned the income of Rs.9,50,000/- as long term capital and claimed deduction of Rs.1,00,000/- u/s 54 of the Act.

During the assessment proceedings the assessee claimed that she being associate member of the society was holding share in the said flat with her husband. The A.O after verifying the facts and details filed by the assessee made an addition of Rs. 9,50,000/- to the income of the assessee under the head ‘income from other sources’. The Assessment Order was challenged before the Ld. CIT(A) by the assessee. Since the Ld. CIT(A) confirmed the addition made by the A.O, the assessee is in appeal before this Tribunal against the impugned order passed by the Ld. CIT(A) on the following effective grounds:- “(i) On the facts and in the circumstances of the case the learned CIT(A) erred in confirming the addition of Rs. 9,50,000/- as income from other sources made by the Assessing Officer and dismissing the appeal of the appellant. (ii) The learned CIT(A) further erred in completely ignoring the amended statement of facts and amended ground of appeal filed by the appellant as per her letter dated. 03/03/2015 which he has reproduced on page 3, para 3 of his order but has nowhere discussed the same. (iii) The appellant was merely an Associate Member of the Society and could not have any proprietary interest in the flat sold by her husband. The entire consideration of Rs. 1,20,00,000/- was received by her husband in his name and deposited in joint accounts of himself and the appellant being his wife. (iv) The amount of Rs. 9,50,000/- has no character stick of income and not received by appellant, cannot be considered as appellant’s income and may thereafter directed to be deleted.”

We have heard the rival contention and also perused the material placed before us. Facts emanating from the record and contentions of the parties reveal that Mr. Ashok T. Hemdev husband of the assessee was the owner of the flat in question and subsequently assessee was made an associate member of the society. The flat was sold for Rs. 1,20,00,000/- and the entire sale consideration was paid by the purchasers through bankers cheques in the name of Mr. Ashok T. Hemdev husband of the assessee. Cheques amounting to Rs. 1,15,00,000/- were deposited in the account of Mr. Ashok T. Hemdev and one cheque for remaining amount i.e., Rs. 5,00,000/-, in favour of Mr. Ashok T. Hemdev was deposited in the joint account of the assessee and her husband Mr. Ashok Hemdev. Hence, there is no dispute regarding the ownership of the flat and sale thereof for Rs. 1,20,00,000/-

Since, Mr. Ashok Hemdev husband of the assessee being the owner of the flat in question has received the entire sale consideration, he was entitled to claim deduction under section 54 of the Act against the entire amount of long term capital gain, on investment thereof in purchase of another flat. So, before adjudicating the sole grievance of the appellant, it is necessary to ascertain whether Mr. Ashok Hemdev husband of the assessee has claimed the entire amount of sale consideration as his long term capital gain in his return of income and has availed deduction u/s 54 of the Act or he has claimed capital gain of Rs.1,10,50,000/-i.e., (Rs.1,20,00,000- 9,50,000=1,10,50,000). If he has claimed the capital gain of Rs. 1,10,50,000/- instead of Rs. 1,20,00,000/-, only then the question of making addition of remaining amount of Rs. 9,50,000/- to the income of the assessee under the head ‘income from other sources’ or ‘long term capital gain’ as the case may be, does arise. But if Mr. Ashok Hemdev has already claimed the entire amount of Rs.1,20,00,000/- as his long term capital then the amount in question cannot be added to the income of the assessee merely for the reason that the assessee has made a wrong claim.

We do not find any evidence of receipt of Rs. 9,50,000/-by the assessee out of the total sale consideration aforesaid. As per the statement of bank account only one cheque for Rs 5.00.000/- has been deposited in her account maintained jointly with her husband. Therefore, we are, of the considered view that before making addition of Rs. 9,50,000/- to the income of the assessee, the matter is required to be examined by the AO in the light of the observations made in the foregoing para, in order to ascertain as to whether the addition of Rs. 9,50,000/- is to be made to the income of the assessee under the head ‘income from other sources’ or to the income of Mr Ashok T. Hemdev, husband of the assessee as ‘long term capital gain’. We, therefore, set aside the impugned order passed by the Ld. CIT(A) and restore the file to the AO with the direction to examine the matter after giving opportunity of being heard to the assessee and to pass assessment order afresh.