Receipt of property through inheritance will not be treated as income from other sources: ITAT

Property receipt - income from other sources - ITAT - taxscan

The Income Tax Appeal Tribunal (ITAT) in Chennai held that when receiving property through inheritance, it will not be treated as income from other sources.

The assessee, Anitha Kumaran being a resident person, admitted an income of Rs.763.95 Lakhs which came under scrutiny. 143(3) of the Income Tax Act. It transpired that the assessee purchased a land of 64,687 square feet along with an apartment building on it having a basement area of ​​950 square feet and a common passageway measuring 2026 square feet and 4748 feet squares for a consideration of Rs. 10 Lakhs empty registered deed of sale executed by M/s. Gay Travels Pvt Ltd (GTPL).

However, the stamp duty value as determined by the registration authority was Rs.445 Lacs. Accordingly, Ld. AO held that the provisions of Section 56(2)(vii) would apply, which provides that where real estate is received by an individual or HUF for consideration less than the value of the stamp duty , the differential would be treated as ‘income from other sources.’

The property was owned by M/s. GTPL. This entity is a family entity and its entire shareholding was held by the assessee’s father and brother, a fact which is not disputed since the same is evidenced by documents filed by GTPL with the Registrar of Companies. . It could be seen that the father owned 95% of the shares while the remaining 5% was owned by the brother. A fact worth noting is that GTPL is a family-sponsored entity from joint family funds. This also appears from the recitals of the deed of declaration-engagement as it was signed by the brother at the expiration of the father of the assessee.

The bench consisting of V Durga Rao, Judicial Member and Manoj Kumar Aggarwal, Accounting Member said that “Finally, on all the facts and circumstances, we would say that the property was received by the assessee under a will / by way of inheritance and therefore the provisions of Section 56 (2) (vii) would not apply in the case of the assessee.” The Income Tax Appeals Tribunal (ITAT) , Chennai held that when receiving property through inheritance, it will not be treated as income from other sources.

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Ms. Anitha Kumaran v ACIT

Counsel for the Appellant: Shri I. Dinesh

Counsel for the Respondent: Shri ARV Sreenivasan


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