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Mar 20, 2025
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Mere 'legal' owner of property needn't pay cap gains tax: ITAT
In a significant decision, the Income Tax Appellate Tribunal (ITAT), Mumbai bench, distinguished between a legal owner (an individual whose name is merely added on purchase of a property, say a spouse or brother) and a beneficial owner (to whom it actually belongs).
The ITAT emphasized that merely having a name on a property title does not necessarily confer ownership if there is clear evidence to the contrary. Thus, on sale of the property, where the proceeds flow solely to the beneficial owner, the individual whose name has been merely added is not obliged to pay tax on capital gains.
Often, when a property is purchased, the name of another family member is added out of ‘love and affection' – such as to provide a degree of security to a spouse.
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