INCOME TAX ACT, 1961

Section 45(1)

Capital gains - Chargeability - In the hands of HUF or individual heirs - Assessee being Karta of HUF and concerned property devolved on assessee on his father's death

Assessee along with other groups of family members sold certain piece of land but paid no capital gains tax. AO noticed that land sold by assessee was ancestral property of the assessee and therefore, AO took the view that capital gain had to be taxed in the hands of HUF, whose Kartha was the assessee. Assessee's case was that after death of grand father of assessee, concerned property devolved on assessee's father and after death of father the property devolved on his five children including assessee as well.Held: Assessee inherited subject property in the situation contemplated by section 8 of Hindu Succession Act, 1956. He did not take it as Kartha of his own undivided family, but took it in his individual capacity. As per principles of intestacy, joint family property ceased to be HUF property on death of Hindu Male and property devolves on heirs in their individual capacity and thus property inherited by respective assessee was their individual property and, therefore, capital gains, if any, was exigible to tax in their individual hands alone and not in the hands of HUF.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08

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