The Income Tax Appellate Tribunal (ITAT), Mumbai Bench held that no change in ownership and character of transaction made in individual capacity by making entries in accounts of partnership firm.
The assessee, Asad Naeemuddin Moulvi has challenged 50% of the addition of Rs 45,13,124 on account of long-term capital gain on sale of immovable property, which has been upheld by the CIT(A). After reducing indexed cost of acquisition out of the valuation as per the stamp duty, the Assessing Officer computed capital gain of Rs 45,13,124 in the assessment order and thus made addition of Rs 45,13,124.
Before the CIT(A) also the assessee reiterated same submission and submitted evidence containing entry in the books of accounts of M/s. Alliance International Tour and Travels and confirmation letter from said firm.
The CIT(A) observed that in the agreement to sale, seller parties were appearing as ‘Ayaz Hassanali Naseer’ and ‘the assessee’ only and there was no reference of firm M/s Alliance International Tours and Travels.
The CIT(A) held that documentation prepared by the assessee was post facto and an attempt to circumvent section 50C of the Income Tax Act. However, the Commissioner sustained the addition to the extent of the 50%, as assessee being co-owner in the property.
A Division Bench consisting of Kuldip Singh, Judicial Member and Om Prakash Kant, Accountant Member held that “Therefore, by way of making entries in the books assessee cannot claim that said property was of accounts the owned by said partnership firm. By way of making entering in the books of accounts of the partnership firm, the assessee cannot change ownership and character of the transaction of purchase and sale entered into in individual capacity. The arguments of the assessee are accordingly rejected.”
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