Shri Abdulkhalil A. Shaikh, Baroda V. The Income Tax Officer, Ward-2(5), Baroda

ITA 2397/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1504 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Assessee Lawyers: MUKESH THAKKER

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA. NO.2397/AHD/2014 (ASSESSMENT YEAR:2009-10) SHRI ABDULKHALIL A. SHAIKH C-5, AMJAD PARK SOCIETY, TANDALJA ROAD, NR. BASIL SCHOOL, VADODARA - 390020 APPELL ANT VS. ITO, WARD 2(5), BARODA RESPONDENT PAN: AFRPS0234E /BY APPELLANT : SHRI MUKESH THAKKER, A.R. /BY RESPONDENT : SHRI DEEPAK SUTARIA, SR. D.R. /DATE OF HEARING : 27.05.2016 /DATE OF PRONOUNCEMENT : 31.05.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, BAR ODA, DATED 22.07.2014 FOR A.Y. 2009-10 ON FOLLOWING GROUNDS. ITA NO.2397/AHD/14 A.Y. 09-10 [SHRI ABDULKHALIL A SHAIKH VS. ITO] PAGE 2 01. ADDITION OF RS.26,39,406/- ON ACCOUNT OF LONG TERM CAPITAL GAINS. 02. CAPITAL GAINS EARNED IS SHARED AND SHOWN IN ITR AS INCOME OF SEVEN FAMILY MEMBERS, STANDS REJECTED, IN ABSENCE OF EVIDENCE FOR ALLOCATION OF LTCG AMONGST FAMILY MEMBERS & ALSO FOR NON-SUBMISSION OF BASIS OF ALLOCATION OF LTCG AMONGST FAMILY MEMBERS. 03. THIS APPEAL IS PREFERRED TO CONSIDER THE INCOME AS LTCG FOR ALL THE FAMILY MEMBERS INDIVIDUALLY AS SHOWN IN THE ITR AND TO WAIVE THE ADDITION OF RS.26,39,406/- AS LTCG IN THE HANDS OF THE ASSESSEE INDIVIDUALLY. 04. TO WAIVE THE PENALTY LEVIED U/S.271(1)(C) OF TH E INCOME TAX ACT. 2. ASSESSEE IS DERIVING INCOME FROM CAPITAL GAINS O F BUSINESS OR PROFESSION. ASSESSEE IS INDIVIDUAL FIL ED HIS RETURN OF INCOME OF RS.1,23,430/-. ASSESSMENT U/S.143(3) OF THE ACT WAS FINALIZED DETERMINING TOTAL INCOME OF RS.27,62, 840/- AFTER MAKING ADDITION OF RS.26,39,406/- ON ACCOUNT OF LON G TERM CAPITAL GAIN. 3. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AU THORITY, WHEREIN VARIOUS SUBMISSIONS WERE MADE ON BEHALF OF ASSESSEE AND AFTER CONSIDERING THE SAME, CIT(A) REJECTED THE CLAIM OF ASSESSEE AND CONFIRMED THE ORDER OF ASSESSING OFFIC ER. 4. IN THIS CASE, IMMOVABLE PROPERTY WAS PURCHASED A S PER SALE DEED DATED 01.01.2001 SHOWING RS.1,30,000/- WA S PAID FOR SHOP NO.5 AND RS.90,000/- WAS PAID FOR SHOP NO. 6, ITA NO.2397/AHD/14 A.Y. 09-10 [SHRI ABDULKHALIL A SHAIKH VS. ITO] PAGE 3 TOWARDS PARTIAL CONSTRUCTED SHOP UPTO SLAB LEVEL RS .1,30,000/- AND RS.90,000/- WERE PAID IN CASH. THE STAND OF AS SESSEE IS THAT PROPERTY WAS BOUGHT BY HIS FATHER FROM HIS LIF E TIME EARNINGS AND SAVINGS AND ABOVE PROPERTIES WERE PURC HASED IN THE NAME OF HIS YOUNGER SON, ASSESSEE WITH WHOM PAR ENTS WERE STAYING. SAID PROPERTY IS CLAIMED TO BE PURCH ASED AFTER HAVING ORAL FAMILY UNDERSTANDING THAT IN THE SAID P ROPERTY ALL THE FAMILY MEMBERS HAVE EQUAL RIGHT. LATTER ON WIL L WAS ALSO EXECUTED BY FATHER OF ASSESSEE TO COVER THE SAID FA MILY ARRANGEMENT. SUBSEQUENTLY, FATHER DIED AND THE SAI D PROPERTY WAS SOLD FOR RS.38,00,000/- IN F.Y. 2008-09 BY ASSE SSEE. THE CLAIM OF EACH FAMILY MEMBER WAS CREATED ON COMMON F AMILY FUNDS. WIDOW MOTHER ON BEHALF OF ALL SHARED CERTAIN COMMON FUNDS IN CASH TO FAMILY MEMBERS AND FURTHER INVESTE D THE MONEY IN OTHER IMMOVABLE PROPERTY, WITH UNDERSTANDI NG AMONG THE FAMILY MEMBERS THAT THE SIMILAR FAMILY ARRANGEMENT OF SHARING EQUALLY WILL BE CONTINUED. THE DETAILS OF INVESTMENT/DISTRIBUTION OF FAMILY FUNDS RECEIVED ON SALE OF PROPERTY OF RS.38,00,000/- IS AS UNDER: I. INVESTMENT IN AGRICULTURAL LAND RS.16,11,600/- II. INVESTMENT IN RESIDENTIAL HOUSE RS. 7,71,000/- III. CASH DISTRIBUTED/GIVEN TO FAMILY MEMBERS RS.14,16 ,000/- IV. CASH ON HAND IN MOTHERS HAND RS. 1,400/- THE ABOVE INVESTMENT AND DISTRIBUTION OF FUNDS WERE CLAIMED TO BE DONE BY THE WIDOW MOTHER AS PER THE FATHERS WILL AND AS ITA NO.2397/AHD/14 A.Y. 09-10 [SHRI ABDULKHALIL A SHAIKH VS. ITO] PAGE 4 PER HER FAMILY SETTLEMENT DISCUSSED ABOVE. FOR THE SAKE OF CONVENIENCE WILL IS REPRODUCED AS UNDER: WILL TODAY ON DT.07.12.2000, THURSDAY, I THE UNDERSIGNED ABDULRASHID ABDULREHMAN SHAIKH, AGE: 78, R/O: C-5, AMJAD PARK, NEAR PATRAKAR CHOKDI, TANDALJA ROA D, VADODARA DO HEREBY EXECUTING MY LAST WILL AND TESTAMENT AS UNDER. (1) I HAVE NOT EXECUTED ANY WILL HERE BEFORE HOWEVE R IF I HAVE EXECUTED ANY WILL OR CODICIL PREVIOUSLY TH EN I REVOKE ALL BY THIS WILL. (2) I AM 78 YEARS OLD, I AM EXECUTING THIS LAST WI LL TO MAKE SUITABLE ARRANGEMENT OF MY MOVABLE IMMOVABLE PROPERTIES AFTER MY DEATH AND NO DISPUTE RAISE REGARDING MY PROPERTIES. I AM RESIDING AT ABO VE MENTIONED ADDRESS. MY SON NAMED ABDULKHALIL ABDULRASHID SHAIKH, AGE: ADULT, OCCUPATION: BUSINESS, R/O: C-5, AMJAD PARK, NEAR PATRAKAR CHOKDI, TANDALJA ROAD, VADODARA LOOKS AFTER ME AND TAKING MY CARE COMPLETELY AND YET. THAT, TAKING MY CARE AT EACH AND EVERY HAPPINESS AND MOURNING OCCASIONS, SOCIAL OCCASION AND IN ALL MATTERS. AND I AM FULLY SURE AND TRUST THAT WILL REMAIN IN FUTURE TOO. I, THE EXECUTOR OF WILL WAS ENGAGED IN BUSINES S OF CYCLE REPAIRING AND SERVICE PUMP AT VADODARA NEAR SARABHAI CHEMICAL, VADIWADI GAM. I HAVE MADE SAVINGS OF RS.2,50,000/- RUPEES TWO LACS FIFTY THOUSAND ONLY FROM THE SAID BUSINESS. WHICH' SAVINGS I HAVE GIVEN TO MY SON ABDULKHALI L ABDULRASHID SHAIKH AND I TOLD HIM TO PURCHASE SHOP NO. 5 AT GROUND FLOOR AND SHOP NO. 6 IN BASEMENT IN MAN RESI CUM PLAZA AT VADIWADI, VADODARA FROM MY SAVINGS, BUT WHEN I DIE AND WHEN THE SAID PROPERTIES TO BE SOLD THEN WHATEVER AMOUNT ITA NO.2397/AHD/14 A.Y. 09-10 [SHRI ABDULKHALIL A SHAIKH VS. ITO] PAGE 5 GAINED FROM IT WILL BE DISTRIBUTED AMONGST MY BELOW MENTIONED LEGAL HEIRS EQUALLY. MY LEGAL HEIRS ARE A S UNDER. NOTARY 1- HAJRAB1 ABDULRASHID SHAIKH, (WIFE) 2-SAIDABI ABDULRASHID SHAIKH (DAUGHTER) 3-ABDULHAMID ABDULRASHID SHAIKH (SON) 4-JAMILABEN ABDULRASHID SHAIKH (DAUGHTER) 5-SAYRABEN ABDULRASHID SHAIKH (DAUGHTER) 6- ABDULKHALIL ABDULRASHID SHAIKH (SON) 7- JAHIDABEN ABDULRASHID SHAIKH (SON) 8- ABDULKHALIK ABDULRASHID SHAIKH (SON) THAT, MY PROPERTIES AS STATED ABOVE WILL BE ARRANGE D AS STATED ABOVE. I AM MAKING MY SIGNATURE IN LIEU OF EXECUTING MY ABOVE WILL AND I AM MAKING MY SIGNATURE IN PRESENCE OF MY TWO WITNESSES. THE SAID WITNESSES HAVE SIGNED HEREUNDER AS WITNESSES IN MY PRESENCE. I AM DECLARING THAT I HAVE EXECUTED THIS WILL AS ABOVE BY READING, UNDERSTANDING, WILLINGLY AND WHICH WILL BE EFFECTED AFTER MY DEATH. THAT, EXECUTED TODAY ON 07TH DAY OF MONTH DECEMBER OF YEAR 2000 AT VADODARA CITY. SIGNATURE WITNESSES SD/ILLEGIBLE L.SD/-I. S. SHAIK (ABDULRASHID ABDULREHMAN (ISMAIL SUPDU SHAIKH) SHAIKH 2.SD/-PRAVINBHAI MAGANBHAI PATEL (PRAVINBHAI MAGANBHAI PATEL) 5. ISSUE BEFORE US IS REGARDING CAPITAL GAINS TAX L IABILITY ON SALE OF ABOVE PROPERTIES WHETHER SAME SHOULD BE LIA BLILITY OF ASSESSEE OR IT SHOULD BE LIABILITY OF ALL FAMILY ME MBERS AS PER ITA NO.2397/AHD/14 A.Y. 09-10 [SHRI ABDULKHALIL A SHAIKH VS. ITO] PAGE 6 WILL/ FAMILY MEMBERS SETTLEMENT AND IN LIGHT OF ACT ION THERE ON. THE DEPARTMENT HAS IMPOSED LIABILITY OF CAPITAL GAIN ON THE ASSESSEE INDIVIDUALLY, ON THE GROUND THAT PROPERTY WAS BOUGHT AND SOLD IN THE NAME OF ASSESSEE INDIVIDUALLY. THE STAND OF ASSESSEE HAS BEEN THAT WIDOW MOTHER HAD DEPOSITED RS.26,50,000/- IN HER BANK ACCOUNT, OUT OF TOTAL SA LE PROCEEDS OF RS.38,00,000/- I.E. AROUND 70% AND AS PER FAMILY SETTLEMENT, SAME WAS DISTRIBUTED BY HER. 6. IT IS SETTLED LEGAL POSITION THAT PROPERTY CAN B E PURCHASED IN THE NAME OF INDIVIDUAL MEMBER OF THE JOINT FAMIL Y, EVEN IF, FUNDS BELONG TO WHOLE FAMILY. IN THIS CASE, FUNDS ORIGINATED FROM THE EARNING OF DECEASED FATHER WHO PURCHASED T HE PROPERTIES IN QUESTION IN THE NAME OF ASSESSEE BUT IT WAS VERY CLEAR BY WAY OF WILL/FAMILY MEMBERS SETTLEMENT THAT THIS PROPERTY BELONGS TO WHOLE FAMILY MEMBERS. ACCORDIN GLY, TO THE WILL/FAMILY ARRANGEMENT DONE BY THE DECEASED FATHER SUBSTANTIAL AMOUNT TO DEPOSIT IN THE BANK ACCOUNT O F MOTHER, WIFE OF THE DECEASED I.E. MOTHER OF ASSESSEE AND IT IS NOT IN DISPUTE THAT SAME WAS DISTRIBUTED AMONG ALL. REGAR DING VALIDITY OF WILL, IT IS SETTLED LEGAL POSITION THAT WILL MAY BE REGISTERED OR UNREGISTERED. FURTHER, ANY FAMILY ARR ANGEMENT MAY ORALLY BE ARRIVED OR IT MAY BE REDUCED IN WRITI NG. IN SUM AND SUBSTANCE, FAMILY WILL IS NOTHING BUT FAMILY SE TTLEMENT. MOREOVER, IT HAS BEEN ACTED UPON AS DESIRED BY DECE ASED FATHER OF THE ASSESSEE. THOUGH, ASSESSEE IS DE FAC TO OWNER OF THE PROPERTIES IN QUESTION BY VIRTUE OF SALE DEED I N HIS NAME. ITA NO.2397/AHD/14 A.Y. 09-10 [SHRI ABDULKHALIL A SHAIKH VS. ITO] PAGE 7 IT WAS PURCHASED IN THE NAME OF ASSESSEE BUT FRUITS OF THE SAME HAVE BEEN DISTRIBUTED AMONG ALL FAMILY MEMBERS AS PER FAMILY WILL/SETTLEMENT AND ACTION THEREON. IN SUCH A SITUATION, IT IS NOT JUSTIFIED TO BURDEN ASSESSEE INDIVIDUALLY AS FAR AS CAPITAL GAIN IS CONCERNED. IN OTHER WORDS, CAPITAL GAIN LIABILITY SHOULD FALL ON ALL FAMILY MEMBERS INDIVIDUALLY. IN THE INTEREST OF JUSTICE, ASSESSING OFFICER IS DIRECTED TO LEVY C APITAL GAIN ON ALL FAMILY MEMBERS AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THEM. 7. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF MAY, 2016. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD: DATED 31/05/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE $ %&%'( ) / CONCERNED CIT 4 )- / CIT (A) ,-./00'(1 '( 123& / DR, ITAT, AHMEDABAD 4/5678 / GUARD FILE. BY ORDER / 1 / 2% '( 123&