Once Exemption claimed on LTCG by Co-Owner has been accepted, then Capital Gain Exemption u/s 54 allowable for assessee: ITAT [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that when exemption claimed on Long Term Capital Gain (LTCG) by a co-owner has been accepted, then Capital Gain Exemption u/s 54 of the Income Tax Act,1961 is allowable for the assessee.

Shri Parin Shah appeared for the assessee and Shri Atul Pandey appeared for the revenue.

Rasilaben Yogeshbhai Patel, the assessee engaged in the business of job work and commission and also deriving income from capital gain and other sources. The assessee during the year sold “Municipal Tenant” for the property situated at Sharda Sahakari Gruh Mandal Ltd. for Rs. 1.9 crore in which the assessee’s share was 50% only. The assessee worked out the LTCG of Rs. 35,14,071/- and the same was claimed as exempted on account of the purchase of the new property.

The AO found that the cost of acquisition for sold-out property claimed by the assessee includesthe cost of purchase of furniture for Rs. 17.5 lakh (100%) in addition to the cost of construction. The AO, re-worked the value of capital gain and exemption under section 54 of the Act and made the addition of Rs. 29,27,396/-by disallowing certain items from the cost of acquisition.

It was noted that the property was sold and the new property was purchased jointly by the assessee with Shri Yogesh N Patel being 50% shareholder and 50% of the sale consideration received by him/ Yogesh N Patel. The assessee has placed on record a copy of the application dated 22-12-2011 along with a copy of the return of income with computation of the total income of his co-owner who declared similar capital gain and claimed a similar exemption. The return of the co-owner has been accepted by the revenue under section 143(1) of the Act.

A Coram of Shri Waseem Ahmed, an accountant member held that “when the LTCG and exemption claimed by the co-owner has been accepted, then the assessee cannot be treated indifferently.”

The ITAT bench accepted the contention of the assessee that once, the similar LTCG offered an exemption claimed by the co-owner has been accepted by the Revenue, then the assessee is also entitled to similar relief. The appeal of the assessee was allowed. 

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