ITAT Mumbai Restores Capital Gains Appeal After Noting Possible Double Taxation Of Property Sale Proceeds

Background

The Income Tax Appellate Tribunal Mumbai Bench has remanded a capital gains dispute for fresh adjudication after observing that income arising from a jointly owned property sale appeared to have already been fully taxed in the hands of the assessee’s husband. The case concerned Bindu Sunilkumar Kalappat, whose appeal before the Commissioner (Appeals) had been dismissed solely on the ground of a 325-day delay. The Assessing Officer had treated her 50 percent share of sale consideration amounting to ₹30 lakh as taxable capital gains, allowing only a nominal cost deduction of ₹1 lakh and adding ₹29 lakh to her income.

Before the Tribunal, the assessee demonstrated that the entire sale consideration of ₹60 lakh had already been disclosed by her husband in his return for AY 2015–16. After applying indexation benefits and claiming exemption under Section 54 of the Income Tax Act, the husband had offered a net long-term capital gain of ₹3.66 lakh to tax. Supporting documents including return filings and Form 26AS also showed TDS on the transaction in the husband’s name.

Outcome

Significantly, the Revenue did not dispute these factual submissions during the hearing. The Tribunal held that the first appellate authority erred in rejecting the appeal purely on limitation without examining the merits, particularly when material on record suggested the same income might be subjected to double taxation. Emphasising substantive justice over procedural technicalities, the Bench directed condonation of delay and ordered a fresh decision on merits.