Tax liability must follow real ownership, not just names on documents.

Spouse’s Name on Property Papers Alone Can’t Decide Tax on Sale Proceeds: ITAT.

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that merely adding a spouse’s name to property documents does not automatically make that spouse liable to pay tax on the entire sale proceeds. The tribunal held that tax authorities must first examine who actually funded and beneficially owned the property. Granting relief to a Mumbai taxpayer facing an addition of ₹62.5 lakh, the ITAT directed the income-tax officer to verify her claim that she was only a nominal co-owner, while the flat was fully purchased and sold by her husband using his own funds. She also contended that the capital gains had already been disclosed and taxed in her husband’s income-tax return. The bench, comprising Amit Shukla and Makarand Vasant Mahadeokar, observed that ownership and taxability depend on real contribution and beneficial interest, not just the inclusion of a name.