Mumbai ITAT rules on capital gains tax ownership

The Income Tax Appellate Tribunal (ITAT) in Mumbai has made an important ruling about property ownership and capital gains tax. It stated that being a legal owner, such as having your name on a property title, does not always mean you are the beneficial owner, or the person who actually owns the property. This decision is significant for families where names are added to property titles for reasons like security or trust. In such cases, the ITAT found that if the sale proceeds go only to the beneficial owner, the legal owner does not have to pay capital gains tax on the sale. The ruling came from the case of V N Jain, who shared a property with his brother. When they sold the property for 54 lakh rupees, the tax officer said Jain would owe tax on his share of the sale. Jain argued that he did not pay for the property and did not receive any of the sale money, as it had been purchased solely by his brother. After reviewing evidence, including purchase documents and the brother's bank statements, the ITAT agreed with Jain. It noted that since he was not a true owner nor benefited from the sale, he should not be taxed on the capital gains. Tax experts have praised this ruling, saying it protects individuals from being unfairly taxed when they are not the actual owners of an asset.