By TIOL News Service

BANGALORE, JAN 05, 2017: THE ISSUE IS - Whether each co-owner of a jointly owned property is obligated to offer capital gains tax on the consideration received from sale of such property, in the ratio of their corresponding shares in the said property. YES IS THE VERDICT.

Facts of the case:

The assessee is an individual. It had jointly owned a property with his mother, but the capital gain accrued on sale of the property was offered to tax by the assessee's mother. Therefore, the assessee had contended that the corresponding capital gain should not be taxed in his hands. The Revenue's counsel had submitted that once the jointly owned property was sold and capital gain has accrued thereon, it should have been offered to tax by assessee and his mother in their respective hands in equal share. But the assessee did not offered it to tax, whereas his mother has offered the capital gains to tax on the sale of entire property.

On appeal, ITAT held that,

++ If the assessee jointly owned the property and the property was sold, capital gain ought to have been offered by both the co-owners on its sale. Therefore, the capital gain charged in the hands of the assessee is correct, but since his mother has already offered the entire capital gain to tax on the sale of property, the corresponding benefit should be given to the mother. Accordingly, the AO in the case of assessee's mother is directed to refund the excess capital gains tax charged in the hands of the mother, as the corresponding capital gain has been assessed in the hands of the assessee.

(See 2017-TIOL-06-ITAT-BANG)