Pradeep Jeyavelu v. ITO

Case snapshot

Sections / provisions: 64

Questions before the Court / Tribunal

• Clubbing of minor child's share/capital gains: The reported decision considers whether income/capital gain from inherited property held for a minor under a court-regulated arrangement should be clubbed with the parent under section 64.

Material facts and background

आदे श /O R D E R This appeal filed by the assessee is directed against the order dated 22.04.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2016-17. 2.

issue emanates for consideration as to whether the ld. CIT(A) is justified in confirming the addition made by the Assessing Officer on account of long term capital gain.

return of income on 28.03.2023 declaring total income of ₹.13,91,143/- in response to the notice under section 148 of the Income Tax Act, 1961 [“Act” in short]. It is noticed that the Assessing Officer asked the assessee to furnish details in support of the deduction claimed in the return of income. The assessee filed details as sought for, which is reflecting in page 3 of the assessment order. The case of the Assessing Officer is that the assessee has not declared income of assessee’s minor daughter on sale consideration received. The assessee explained that he himself and his daughter are the legal heirs of the property inherited through his spouse after her death. He accounted his share of 50% and claimed deduction under section 54 of the Act by filing valuation report given by the Chartered Engineer and registered valuer. 4.

explained that in pursuance of court order dated 27.03.2015 deposited her share in nationalized bank, which is reflected in page 12 of the impugned order. The Assessing Officer was of the opinion that the assessee’s minor daughter’s share should be accounted in the hands of the assessee since transfer has taken place in terms of the provisions under Income Tax Act. Accordingly, the Assessing Officer determined

capital gains with reference to assessee’s minor daughter’s share at 50% by giving benefit under section 54 of the Act only with reference to assessee’s share. The ld. CIT(A) confirmed the view of the Assessing Officer. 5.

as well as Assessing Officer failed to understand that the assessee’s minor daughter’s sale consideration is curtailed to be utilized as per the directions of City Civil Court at Chennai. He argued that the minor daughter’s share cannot be treated as income until such sale consideration is free of constraints either in the hands of the assessee or in the hands of his minor daughter. He vehemently argued that 50% share of assessee’s minor daughter cannot be utilized for determination of capital gain nor investing in any assets to claim deduction from capital gain as it is deposited in a nationalized bank as per Court’s order. He submits that the said amount, which is deposited in the nationalized bank, cannot be used until his minor daughter attains majority and it should be free from all restraints to determine the same as income of the assessee. He argued that the authorities below failed to appreciate that the inability of the assessee in utilizing the share of his minor daughter in the sale proceeds and the said 50% share cannot be clubbed in the accounts of

the assessee for determining long term capital gain. He prayed to allow the ground in deleting the addition made by the Assessing Officer. 6.

Appellant / assessee submissions

The ld. AR Shri R.S. Hithesh, Advocate submits that the ld. CIT(A)

Therefore, I find force in the argument of the ld. AR that the assessee cannot decide the utilization of his minor daughter’s share as it is deposited as per Court’s order and it is impossible to club the same in assessee’s hand. Therefore, I accept the submissions of the assessee’s AR, which is reproduced at page 12 of the impugned order and hold that the addition made in the hands of the assessee with reference to assessee’s minor daughter’s share is not justified and it is deleted. Consequently, the brokerage charges, which is of 1% of the sale consideration, as it is usual practice across real estate sector, it is disallowed for want of evidence is also deleted by accepting the assessee’s submissions. Thus, the grounds raised by the assessee are allowed. 8.

Revenue / respondent submissions

The ld. DR Ms. V. Aswathy, JCIT submits that the issue is very

Court / Tribunal analysis and reasoning

daughter’s share in the nationalized bank as the minor daughter being a legal heir succeeding to the property of her deceased mother. There is no dispute with regard to accounting of assessee’s 50% share and offering the same as capital gain with the deduction of claim under section 54 of the Act. There is no dispute with regard to the Assessing Officer accepting the said claim under section 54 of the Act and determination of the capital gain in the hands of the assessee. The only issue is the assessee should have included the share of assessee’s minor daughter also in his hand in offering long term capital gain in the year under consideration. Admittedly, the said 50% share of assessee’s minor daughter was deposited in the name of Registrar, City Civil Court, Chennai under section 8(2) of Hindu Minority and Guardianship Act, 1956, the receipt of which is reflecting in page 12 of the impugned order. On perusal of the order dated 27.03.2015 in HMGOP No. 21 of 2015 on the file of the City Civil Court, Chennai, it is noted that the assessee herein filed a petition seeking permission of the Court to alienate property standing in the name of his deceased wife stating to facilitate...

Therefore, I find force in the argument of the ld. AR that the assessee cannot decide the utilization of his minor daughter’s share as it is deposited as per Court’s order and it is impossible to club the same in assessee’s hand. Therefore, I accept the submissions of the assessee’s AR, which is reproduced at page 12 of the impugned order and hold that the addition made in the hands of the assessee with reference to assessee’s minor daughter’s share is not justified and it is deleted. Consequently, the brokerage charges, which is of 1% of the sale consideration, as it is usual practice across real estate sector, it is disallowed for want of evidence is also deleted by accepting the assessee’s submissions. Thus, the grounds raised by the assessee are allowed. 8.

Operative decision and relief

in the name of assessee’s deceased wife. The assessee sold the said property with the permission of City Civil Court and deposited 50% minor

daughter’s share in the nationalized bank as the minor daughter being a legal heir succeeding to the property of her deceased mother. There is no dispute with regard to accounting of assessee’s 50% share and offering the same as capital gain with the deduction of claim under section 54 of the Act. There is no dispute with regard to the Assessing Officer accepting the said claim under section 54 of the Act and determination of the capital gain in the hands of the assessee. The only issue is the assessee should have included the share of assessee’s minor daughter also in his hand in offering long term capital gain in the year under consideration. Admittedly, the said 50% share of assessee’s minor daughter was deposited in the name of Registrar, City Civil Court, Chennai under section 8(2) of Hindu Minority and Guardianship Act, 1956, the receipt of which is reflecting in page 12 of the impugned order. On perusal of the order dated 27.03.2015 in HMGOP No. 21 of 2015 on the file of the City Civil Court, Chennai, it is noted that the assessee herein filed a petition seeking permission of the Court to alienate property standing in the name of his deceased wife stating to facilitate...

Therefore, I find force in the argument of the ld. AR that the assessee cannot decide the utilization of his minor daughter’s share as it is deposited as per Court’s order and it is impossible to club the same in assessee’s hand. Therefore, I accept the submissions of the assessee’s AR, which is reproduced at page 12 of the impugned order and hold that the addition made in the hands of the assessee with reference to assessee’s minor daughter’s share is not justified and it is deleted. Consequently, the brokerage charges, which is of 1% of the sale consideration, as it is usual practice across real estate sector, it is disallowed for want of evidence is also deleted by accepting the assessee’s submissions. Thus, the grounds raised by the assessee are allowed. 8.

Authorities and precedents appearing in the judgment

• No reliable precedent list was extracted automatically; use the full judgment for the citation chain.

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Clubbing of minor child's share/capital gains. The operative result is classified as Assessee appeal allowed. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Clubbing of minor child's share/capital gains. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Maintain a date-and-payment matrix for transfer, agreement, possession, investment and construction; capital-gains exemptions commonly turn on this chronology.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

Related Finin2min guidance