DCIT, CHENNAI V. S.Rajarathinam, CHENNAI

ITA 1457/CHNY/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9223 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: JAHRNA B HARILALC A
• Keywords: Gift

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER I.T.A.NOS.1457 & 1458/CHNY/2016 AND C.O.NOS.26 & 27/CHNY/2017 / ASSESSMENT YEARS : 2010-11 & 2012-13 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I(2), CHENNAI 600 034. VS. SHRI S.RAJARATHINAM , 10,LAXMANAN STREET, T.NAGAR,CHENNAI 600 017. [PAN ACXPR 0997 A] ( / APPELLANT) ( /RESPONDENT / CROSS OBJECTOR) ! ' / APPELLANT BY : MR.S.BHARATH, CIT,D.R #$ ! ' /RESPONDENT BY : MS.JAHRNA B.HARILAL,C.A % & ! '( / DATE OF HEARING : 13 - 12 - 201 8 ) ! '( / DATE OF PRONOUNCEMENT : 17 - 12 - 201 8 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THESE ARE APPEALS FILES BY THE REVENUE AGAINST TH E COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1 8, CHENNAI IN ITA NOS.92 TO 94/14-15 DATED 08.02.2016 FOR ASSESSMENT YEARS 2010-11 & ITA NOS.1457 & 1458 /CHNY/2018 :- 2 -: 2012-13 AND CORRESPONDINGLY, THE ASSESSEE FILED CRO SS OBJECTIONS IN SUPPORT OF THE ORDER OF LD.CIT(A), INVOLVING IDENTI CAL ISSUES, THEREFORE, THE APPEALS AND CROSS-OBJECTIONS ARE TAKEN UP TOGET HER FOR ADJUDICATION. 2. MR.S.BHARATH REPRESENTED ON BEHALF OF THE REVEN UE AND MS.JAHRNA B.HARILAL REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY LD.D.R IN ITA NO.1457/CHNY/ 2016 THAT THE THE REVENUE HAS CHALLENGED THE ACTION OF THE LD .CIT(A) IN HOLDING THAT THE MUTUAL RELINQUISHMENT OF RESPECTIVE SHARES IN FAVOUR OF EACH OTHER BY THE ASSESSEE AND HIS BROTHER IS A BONA FIDE ONE TO RESOLVE FAMILY DISPUTES BY EQUITABLE DIVISION OR ALLOTMENT OF PROPERTIES BETWEEN VARIOUS MEMBERS OF THE FAMILY. IT WAS A SUB MISSION THAT THE ASSESSEE IS AN INDIVIDUAL BELONGS TO SARAVANA GROUP . DUE TO VARIOUS DISPUTES BETWEEN THE ASSESSEE AND HIS BROTHER, FAMI LY ARRANGEMENTS HAD BEEN ARRIVED AT BY WHICH VARIOUS PROPERTIES HAD BEEN DISTRIBUTED BETWEEN THE ASSESSEE AND HIS BROTHER SHRI S.YOGARAT NAM. IT WAS A SUBMISSION THAT THE PROPERTIES ARE NOT INHERITED OR HUF PROPERTIES, THE ASSESSEE HAD RELINQUISHED 50% SHARES IN JOINTLY HEL D PROPERTIES IN FAVOUR OF THE BROTHERS VIDE SETTLEMENT DEED DATED 0 5.03.2010 AND SHRI S.YOGARATNAM HAD ALSO RELINQUISHED 50% IN SHAR ES CERTAIN OTHER JOINTLY HELD PROPERTIES BY WAY OF ANOTHER SETTLEMEN T. IT WAS A ITA NOS.1457 & 1458 /CHNY/2018 :- 3 -: SUBMISSION THAT BY THE SETTLEMENT DEED, WHAT HAS BE EN DONE IS THE PROPERTY HAS BEEN TRANSFERRED FROM ONE HAND TO ANO THER AND CONSEQUENTLY CAPITAL GAINS WAS LIABLE TO BE LEVIED, WHICH WAS DONE BY THE LD. ASSESSING OFFICER. IT WAS A SUBMISSION THA T LD.CIT(A) FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS.A.L.RAMANATHAN IN 245 ITR 494(MAD.), AS ALSO THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M /S.SARAVANA STORES (TEX) FOR ASSESSMENT YEAR 2003-04 IN ITANO.2079/MDS ./2008 HAD HELD THAT THE PARTITION IS A BONA FIDE ONE AND CAPITAL G AINS WAS NOT LEVIABLE ON THE SAME. IT WAS A SUBMISSION THAT THE ORDER OF THE CIT(APPEALS) IS LIABLE TO BE REVERSED. 4. IN REPLY, LD.A.R SUBMITTED THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS DECIDED THE ISSUE IN THE CASE OF SHRI S.YOGARATNAM IN 985 TO 988, 1037 & 1038/MDS./2016 VIDE ORDER DATED 15.0 3.2017 FOR ASSESSMENT YEARS 2006-07 & 2010-11 & 2012-13 WHEREI N IT HAS BEEN HELD IN PARAS 13.2, 13.3, 14 & 15 AS FOLLOWS:- 13. 2. THE FACTS OF THE ISSUE ARE THAT THE ALONG W ITH HIS BROTHER HAVE PURCHASED VARIOUS PROPERTIES JOINTLY. DUE TO F AMILY ARRANGEMENT BOTH HAD AGREED TO PARTITION THE PROPER TIES, WHICH WERE PURCHASED JOINTLY BY WAY OF SETTLEMENT DEED DA TED 05.03.2010. THE ASSESSEE RELIEVED FROM THE JOINT HO LDINGS IN CRAIN PROPERTIES AND SETTLED THE SAME AS GIFT TO HIS BROT HER, MR.S.RAJARATNAM OUT OF HIS OWN FREE WILL AND LOVE & AFFECTION WHILE BEING IN A VERY SOUND STATE OF MIND AND THAT THERE HAS BEEN NO KIND OF PRESSURE AND COERCION ON HIM. SIMILAR THING S HAD ALSO ITA NOS.1457 & 1458 /CHNY/2018 :- 4 -: BEEN DONE BY HIS BROTHER IN FAVOUR OF ASSESSEE. TH E AO HAS IMPOSED TAX BY ALLEGING THAT THE SETTLEMENT DEED MA DE OUT BY HIS BROTHER IN FAVOUR OF ASSESSEE FALLS UNDER TRANSFE R AS PER SEC.2(47) OF THE ACT. THUS, HE IMPOSED SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS ON THE DIFFERENCE BETWE EN GUIDELINE VALUE AND VALUE SHOWN IN THE BOOKS FOR THE PROPERTI ES SETTLED IN FAVOUR TO THE ASSESSEE. AGGRIEVED, THE ASSESSEE CAR RIED THE APPEAL BEFORE THE LD.CIT(A). 13.3 ON APPEAL, THE LD.CIT(A) OBSERVED THAT DUE TO FAMILY ARRANGEMENT, BOTH THE BROTHERS AGREED TO PARTITION THE PROPERTIES BY WAY OF SETTLEMENT DEED. THE ASSESSEE BY WAY OF S ETTLEMENT DATED 5.2.2010 HAD GIVEN CERTAIN PROPERTIES TO HIS BROTHER MR.S.RAJARATNAM AS GIFT. SIMILARLY, MR.S.RAJARATNAM HAD ALSO GIVEN CERTAIN PROPERTIES TO THE ASSESSEE. BUT THE A O HAS IMPOSED CAPITAL GAINS TAX BY STATING THAT THE SETTLEMENT DE ED MADE OUT BY HIS BROTHER, MR.S.RAJARATNAM IN FAVOUR OF THE ASSES SEE FALLS UNDER TRANSFER AS PER SECTION 2(47) OF THE ACT. ACCORD ING TO LD.CIT(A), IN THE PRESENT CASE, THE FIRST QUESTION TO BE ADDRE SSED IS WHETHER PROPERTY JOINTLY PURCHASED BY BROTHERS PARTITIONED BY WAY OF SETTLEMENT WILL AMOUNT TO TRANSFER WITHIN THE MEANI NG OF SEC.2(47) OF THE ACT OR NOT. LD.CIT(A) FOLLOWING THE DECISIO NS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. A .L.RAMANATHAN IN 245 ITR 494(MAD.) AND CIT VS. A.L.RAMANATHAN IN 245 ITR 494 (MAD.) AND TRIBUNAL DECISION IN ITA NO.2079/MDS ./2008 IN THE CASE OF M/S.SARAVANA STORES (TEX) FOR ASSESSMENT YE AR 2003-04 , LD.CIT(A) DELETED THE ADDITION ON TH REASON THIS IS A BONAFIDE ONE SO AS TO RESOLVE FAMILY DISPUTES AND RIVAL CLAIMS B Y A FAIR AND EQUITABLE DIVISION OR ALLOTMENT OF PROPERTIES BETWE EN THE VARIOUS MEMBERS OF THE FAMILY. AGGRIEVED, THE REVENUE IS I N APPEAL BEFORE US. ITA NOS.1457 & 1458 /CHNY/2018 :- 5 -: 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. IN OUR OPINION, THE DISTINCTION MADE BY THE LOWER AUTHORITIES BETWEEN GIFT AND SETTLEMENT IS NOT COR RECT. IT IS CATEGORICALLY HELD IN THE CO-ORDINATE BENCH IN THE CASE OF MR.ABDUL HAMEED KHAN MOHAMMED IN ITA NOS.1782/MDS./ 2015 VIDE ORDER DATED 29.12.2015 FOR ASSESSMENT YEAR 201 1-12 THAT TRANSFER OF PROPERTY MADE VOLUNTARILY AND WITHOUT C ONSIDERATION BY WAY OF SETTLEMENT DEED, ALL WITHIN THE DEFINITION O F GIFT AND THERE IS NO DIFFERENCE BETWEEN THE GIFT AND SETTLEMENT U/S. 49(1)(II) OF THE ACT. WHILE ADJUDICATING THIS, THE TRIBUNAL PLACED RELIANCE ON SEC.122 OF THE TRANSFER OF PROPERTY ACT, 1882 AND A LSO FROM THE COCHIN BENCH OF TRIBUNAL IN THE CASE OF ACIT VS. AN JANA MOHAN (2013) 36 CCH 0008(COCHIN) AND ALSO REDINGTON (INDI A) LTD. VS. JCIT REPORTED IN 40 CCH 527 (CHENNAI). 15. IN VIEW OF THIS, IN OUR OPINION THE ARTIFICIAL DISTINCTION MADE BY THE LOWER AUTHORITIES WITH REFERENCE TO THE GIFT AN D SETTLEMENT IS NOT APPROPRIATE AND WE ARE OF THE OPINION THAT FOR THE PURPOSE OF SEC.49(1)(II), THERE IS NO DIFFERENCE BETWEEN THE G IFT AND SETTLEMENT AND IN THE PRESENT CASE, THE SETTLEMENT MADE WITH THE A SSESSEES BROTHER MR.S.RAJARATNAM AND THERE CANNOT BE ANY CAPITAL GA INS ON THIS COUNT. THE GROUND RAISED BY THE REVENUE IS DISMISSED. IT WAS THE PRAYER THAT THE ISSUE WAS SQUARELY COVER ED BY THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE O F SHRI S.YOGARATNAM(SUPRA). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE FACTS IN THE PRESENT CASE CLEARLY SHOWS THAT THE IS SUE AS TO WHETHER THE FAMILY SETTLEMENT ARRIVED AT BETWEEN ASSESSEE AND H IS BROTHER, SHRI S.YOGARATNAM, IS SQUARELY COVERED BY THE DECIS ION OF CO-ORDINATE ITA NOS.1457 & 1458 /CHNY/2018 :- 6 -: BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI S.YOGARA TNAM REFERRED TO SUPRA, RESPECTFULLY FOLLOWING THE FINDINGS AS ARRIV ED AT BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN SHRI S.YOGARA TNAM(SUPRA), FINDING OF THE LD.CIT(A) STANDS CONFIRMED. 5. IT WAS SUBMITTED BY LD.D.R IN ITA NO.1458/CHNY/ 2016 THE REVENUE HAS CHALLENGED THE ACTION OF THE LD.CIT(A) IN DELETING THE ADDITION MADE BY THE LD. ASSESSING OFFICER ON ACCOU NT OF THE CESSATION OF LIABILITIES IN THE NAME OF SHRI S.SELVARATHINAM. IT WAS A SUBMISSION THAT AS LIABILITY WAS MORE THAN THREE YEARS OLD, TH E SAME WAS LIABLE TO BE ADDED BY INVOKING THE PROVISIONS OF THE SECTION 41(1) OF THE ACT. 6. IN REPLY, THE LD.A.R SUBMITTED THAT THE ISSUE W AS SQUARELY COVERED BY THE DECISION OF CO-ORDINATE BENCH OF THI S TRIBUNAL IN THE CASE OF SHRI S.YOGARATNAM REFERRED TO SUPRA, WHERE IN IN PARA-12, THE TRIBUNAL HAS HELD AS FOLLOWS:- 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. BEFORE THE AO, THE ASSESSEE HAD NOT BROUGHT ON RECORD TO SHOW WHAT WAS NATURE OF LIABILITY WHET HER ANY DEDUCTION WAS ALLOWED TO THE ASSESSEE IN EARLIER YE AR OR NOT. NO SUCH INFORMATION MADE AVAILABLE TO THE AO. BEFORE T HE LD.CIT(A), THE ASSESSEE PRODUCED THE ACCOUNT COPIES OF EARLIER YEARS AND FROM THAT LEDGER ACCOUNTS, THE LD.CIT(A) CAME TO A CONCLUSION THAT IT IS ONLY AN UNSECURED LOANS PAYAB LE TO ITA NOS.1457 & 1458 /CHNY/2018 :- 7 -: ASSESSEES BROTHER SHRI RAJARATNAM AND HE OBSERVED THAT IT IS A CAPITAL LIABILITY. ON THIS REASON, HE DELETED THE A DDITION MADE U/S.41(1) OF THE ACT. IN OUR OPINION, WHENEVER LD.C IT(A) COLLECTED ANY FRESH EVIDENCE IN THE COURSE OF PROCEEDINGS BEF ORE HIM, IT IS APPROPRIATE TO CALL FOR COMMENT FROM THE AO AND IN THIS CASE, THE AO WAS DEPRIVED OF COMMENT THE EVIDENCES PRODUCED B EFORE THE LD.CIT(A). HENCE, WE ARE OF THE OPINION THAT THE IS SUE HAS TO BE CONSIDERED BY AO AND TO DECIDE AFRESH IN ACCORDANCE WITH LAW. ACCORDINGLY, WE SET ASIDE THE ORDER OF LOWER AUTHOR ITIES AND REMIT THE ISSUE IN DISPUTE TO THE FILE OF AO FOR FRESH CO NSIDERATION. THE AO HAS TO DECIDE THE ISSUE AFTER GIVING ADEQUATE OP PORTUNITY TO THE ASSESSEE. THE LD.A.R VEHEMENTLY SUPPORTED THE ORDER OF THE LD .CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS I T IS NOTICED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI S.YOGARATNAM REFERRED TO SUPRA, RESPECTFULLY FOLLOWING THE FINDINGS AS ARRIVED AT B Y THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN SHRI S.YOGARA TNAM(SUPRA), FINDING OF THE LD.CIT(A) STANDS CONFIRMED. 8. AS THE TWO CROSS OBJECTIONS FILED BY ASSESSEE ARE ONLY IN SUPPORT OF THE ORDER OF THE CIT(APPEALS) AND AS W E HAVE ALREADY UPHELD THE ORDER OF THE CIT(APPEALS) IN RESPECT OF BOTH THE APPEAL OF ITA NOS.1457 & 1458 /CHNY/2018 :- 8 -: THE REVENUE, THE CROSS OBJECTIONS FILED BY THE ASSE SSEE BECOME INFRUCTUOUS AND STAND DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AND BOTH THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DECEMBER, 2018, AT CHENNAI. SD/ - SD/ - ( . ) (A.MOHAN ALANKAMONY) ! '# / ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) $ '# / JUDICIAL MEMBER , & / CHENNAI - / DATED: 17 TH DECEMBER, 2018. K S SUNDARAM . / ! #'01 2 1' / COPY TO: 1 . / APPELLANT 4. . . % 3' / CIT 2. #$ / RESPONDENT 5. 145 #'6 / DR 3. . . % 3' () / CIT(A) 6. 57 8& / GF