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2019 (12) TMI 1177 - AT - Income TaxCapital gain on property inherited - Exemptions u/s 54F and 54B - inheritance of property of an individual who dies intestate, after the introduction of Hindu Succession Act, 1956 - AO considering the property as HUF property of the respective assessee - HELD THAT:- We find that undoubtedly the land in question was inherited by the assessee and his family members on the death of their predecessor. In the case of Yudhishter Vs. Ashok Kumar [1986 (12) TMI 380 - SUPREME COURT] has clearly held that after Hindu Succession Act, 1956, when the son inherited the property in the situation contemplated by section 8, he does not take it as Kartha of his own undivided family, but takes it in his individual capacity. In the case of Uttam Vs. Saughag singh & Ors [2016 (3) TMI 1369 - SUPREME COURT] the Hon’ble Supreme Court has held that the share of the Hindu male coparcener is governed by the proviso to section 6 of Hindu Succession Act and a partition is effected by operation of law immediately before his death and in this partition, all the coparceners and the Hindu Male’s widow get a share in the joint family property. On the application of section 8 of the Act, it was held that such property would devolve only by intestacy and not survivorship. It was also held that after the joint family property has been distributed in accordance with section 8 on the principles of intestacy, the joint family property ceases to be joint family property in the hands of the various persons who have succeeded to it as they hold the property as tenants in common and not as joint tenants. Thus, the above decisions of the Hon’ble Supreme Court on the inheritance of property of an individual who dies intestate, after the introduction of Hindu Succession Act, 1956, hold that on the death of the Hindu Male, the property devolves on the heirs in their individual capacity and ceases to be the HUF property. Respectfully following said decision, we hold that the property inherited by the respective assessees is their individual property and, therefore, the capital gains, if any, is exigible to tax in their individual hands alone. Whether the said property is a capital asset u/s 2(14) - It is not required to be adjudicated at this stage as it has already been decided by the coordinate bench of this Tribunal in the assessee’s case in the earlier round of litigation that it is a capital asset u/s 2(14) of the IT Act. Thus, the grounds of appeal on this issue in the case of all the assessee’s are rejected. Claim of deduction u/s 54B - We find that the AO and CIT(A) have not really examined the allowability of such claim by holding the assessee to be an HUF and held that deduction u/s 54B is allowable only in the case of individuals. Further, with regard to the claim of deduction u/s 54F also, the AO has not gone into the details of the investment made in the residential property and whether the conditions of section 54F are fulfilled by the respective assessees. Therefore, we are of the view that the grounds of appeal on the issue of deduction under sections 54F and 54B needs reconsideration afresh by the AO. Therefore, they are set aside to the file of the AO and the grounds are treated as allowed for statistical purposes. Expenditures claimed as incurred towards sale of their land, the assessees have not been able to provide any evidence in support of such claim and, therefore, disallowance of such claim is confirmed in each of the cases. All the appeals of the assessees are treated as partly allowed and only as regards the claim u/s 54F & 54B they are are set aside to the file of the AO.
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