Sale Consideration to Be Excluded From Assessee’s Income if He Was Only a Name Lender in Sale Deed | ITAT

Case Details: Vinod Nihalchand Jain Ltd. vs. ITO - [2025] 172 taxmann.com 581 (Mumbai-Trib.)

Judiciary and Counsel Details

• Sandeep Singh Karhail, Judicial Member & Amarjit Singh, Accountant Member
• Ravi Dasija for the Appellant.
• Pravin Salunkhe, Sr.DR for the Respondent.

Facts of the Case

The assessee is an individual who earns income from salary, capital gains on equity shares, and mutual funds. Since the taxable income was below the basic exemption limit for the year under consideration, he did not file the return of income. Subsequently, the Assessing Officer (AO) issued a notice under section 148 based on the information that the assessee had sold immovable property.

During the assessment proceedings, the assessee submitted that his brother originally purchased the immovable property, and his name was added to the property as a joint owner out of natural love and affection.

AO didn’t accept the assessee’s submissions and held that no family arrangement exists whereby the assessee relinquished the right to the property before the sale. He added Rs. 27 Lakh to the assessee’s total income as Long-Term Capital Gains under section 45 of the Act.

On appeal, CIT(A) upheld the additions made by AO, and the matter reached the Mumbai Tribunal.

ITAT Held

The Tribunal held that the assessee’s name was mentioned in the purchase deed as one of the joint owners, but his brother paid the entire consideration. His brother was in actual possession and had 100% rights over the said property. Even in the subsequent year, the assessee’s brother declared the entire consideration in his return of income and claimed the benefit of exemption under section 54F of the Act.

The assessee also produced an affidavit executed by his brother, admitting that he and his father made the entire payment for the purchase of the said property and that the assessee had not contributed anything to the purchase.

The assessee’s brother paid the entire purchase consideration, was in actual possession, and had 100% rights over the said property. Even though the assessee’s name was mentioned in the purchase deed as one of the joint owners, the consideration received on the sale of the said property cannot be added to the assessee’s income.