The Chennai Income Tax Appellate Tribunal (ITAT) presided by Mr. Mahavir Singh, Vice President and Mr. Manoj Kumar Aggarwal, Accountant Member has held that property purchased by coparceners of Hindu Undivided Family (HUF) in their individual capacity is assessable under section 64(2)(b) and upholds revision.
The appellant, M/s. Mahadevan HUF, during the course of assessment Assessing Officer noticed that the assessee claimed that new asset having been purchased out of the consideration from sale of original assets belonging to assessee HUF as the property of assessee HUF in its statement of affairs. The AO framed assessment u/s.143(3) of the Act and passed order accepting assessee’s return of income.
Subsequently, the PCIT issued show-cause notice alleging that the original assets were purchased by Smt. Bhavani Mahadevan and Shri R. Mahadevan in individual capacity and accordingly, the consideration received on account of sale of the original assets, the provisions of section 64(2)(b) of the Act comes into play and the property sold has to be treated as transfer by individuals and not by the HUF. The PCIT held the taxation of LTCG and allowance of deduction u/s.54F in the hands of the assessee-HUF is not in accordance with law and allowing the same in the assessment order has resulted in an erroneous order, which is also prejudicial to the interest of revenue. Aggrieved, assessee filed appeal before the Tribunal.
The Tribunal observed that the individual Smt. Bhavani Mahadevan and Shri R. Mahadevan had purchased the land on 1994 and 1995 respectively. But the assessee failed to file any detail regarding the nucleus of the HUF during the period i.e., financial year 1994-95 & 1995-96.
The Tribunal has held that “we are of the view that the PCIT’s finding is supported by evidences that these properties by Smt. Bhavani Mahadevan and Shri R. Mahadevan are all in their individual capacities purchased in the year during 1994 & 1995. There is no evidence that these properties were purchased by assessee HUF i.e., Mahadevan HUF and in the absence of any evidence, we cannot reverse the findings of PCIT”.
Advocate Mr. Suhrith Parthasarathy appeared on behalf of appellant and Mr. Guru Bashyam appeared on behalf of respondent.
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