Smt P.K Vijayalakshmi , Bangalore V. Income Tax Officer Ward-5(2)(2), Bangalore

ITA 3381/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9351 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 21-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: B S BALACHANDRAN
• Keywords: Capital asset; Cost of acquisition; Tangible material; Reason to believe; TDS
• Section: 143(1); 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH ES : C , BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNTANT MEMBER AND S MT.BEENA PILLAI , JUDICAL MEMBER ITA NO. 3381 (BANG)/ 20 1 8 ( ASSESSMENT YEAR : 20 11 - 12 ) SMT. P.K. VIJAYALAKSHMI . M/S PAMADI R A MACHANDRA 513, AVENUE ROAD, BANGALORE - 560 0 02 PAN NO. A A GPV9692M APPELLANT VS THE INCOME TAX OFFICER , WARD - 5(2)(2), BANGALORE RESPONDENT APPELLANT BY : S HRI B. S . BALACHANDRAN , A DVOCATE RE VENUE BY : DR. P.V.PRADEEP KUMAR, ADDL. C IT DATE OF HEARING : 24 - 0 6 - 2019 DATE OF PRONOUNCEMENT : 28 - 06 - 2019 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER : PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 13/08/18 PASSED BY LD. CIT (A) - 5, BANGALORE ROUTE FOR ASSESSMENT YEAR 2011 - 12 ON FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LOW E R AUTHORITIES AR E ERRONEOUS , ILLEGAL AND UNJUSTIFIED AND NOT SUSTAINABLE IN LAW AND ON FATS AND EVIDENCES. ITA NO. 3 3 81 /BANG/201 8 2 2. THE AO HAS ERRONEOUSLY ASSUMED JURISDICTION U/S 147 WITHOUT ANY POST ASSESSMENT TANGIBLE MATERIAL EVIDENCE COMING INTO THE POSITION OF THE A O AS CAN BE SEEN FROM THE REASONS RECORDED U/ 148(2) WHEREIN THERE IS ABSOLUTELY NO REF E RENCE TO ANY SUCH POST A SSESSMENT TANGIB L E MATERIAL. 3. WITHOUT PREJUDICE TO THE OTHER GROUND THE LOWER AUTHORITIES BROUGHT TO TAX ENTIRE CAPITAL GAINS IN THE HANDS OF THE APPELLANT WITHOUT PROPERLY UNDERSTANDING THE IMPLICATION OF THE WILL, IN THE RIGHT PERSPECTIVE. 4. WITHOUT PREJUDICE TO THE OTHER GROUND THE LOWER AUTHORITIES HAS ERRED IN TAKING A VIEW THAT THE APPELLANT HAS CREATED A SMOKE SCREEN ON SUSPICION, ASSUMPTIONS AND PRESUMPTIONS WITHOUT BRINGING ON RECORD ANY EVIDENCE IN SUPPORT OF SUCH A V IEW. 5. WITHOUT P REJUDICE TO THE OTHER GROUND THE LOWER AUTHORITIES FAILED TO CONSIDER AND APPRECIATE THE LAW ON FACTS IN VIEW OF THE WILL IN THE RIGHT PERSPECTIVE AND THIS IN THEIR APPROACH AND CONCLUSIONS HAVE THUS COME TO AN ERRONEOUS DECISION WHICH VIEWED FROM ANY ANGL E IS LIABLE TO BE REVERSED. 6. FOR THESE OR ANY OTHER GROUND THAT MAY BE URGED DURING THE HEARING OF THE APPEAL WITH THE PERMISSION OF THE HON'BLE ITAT IS PRAYED THAT T H IS APPEAL MAY BE ALLOWED BY CANCELLING THE RE - ASSESSMENT IN THE INTEREST OF EQUITY AND JUSTICE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SSESSEE FILED ITS RETURN OF INCOME ON 03/09/1 0 DECLARING TOTAL INCOME OF RS.67, 430/ - . RETURN WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT. THE CASE WAS REOPENED UNDER SECTION 147 FOR FOLLOWING REASONS: THE ASSESSEE HAS DECLARED LONG TIME CAPITAL GAIN ON HER SHARE OF RECEIPT OF CONSIDERATION ON TRANSFER OF THE PROPERTY, IN T HE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011 - 12. THE ASSESSEE HAS DECLARED LONG TERM CAPITAL GAIN OF RS.20,06,082/ - AFTER CLAIMING INDEXED COST OF ACQUISITION AND EXEMPTION U/S 54EC OF RS.50,00,000 (RCEIC BOND) THE OTHER TWO NEPHEWS OF THE ITA NO. 3 3 81 /BANG/201 8 3 ASSESSEE H AVE ALSO DECLARED LONG TIME CAP[ITAL GAINS AFTER CLAIMING INDEXED COST OF ACQUISITION AND EXEMPTION U/S54EC FO R RS.50,00,0000(REIC BOND) IN THEIR RESP ECTIVE RETURNS OF INCOME. THE PROPERTY MENTIONED ABOVE WAS ACQUIRED BY THE ASSESSEE UPON DEATH OF HER HUSBAND . PAGE 5 OF THE SALE DEED OF THE PROPERTY WHICH WAS SOLD INTER ALIA MENTIONS THAT WH EREAS TH E VENDOR AT SL.NO.1 HAD ACQUIRED THE SCHEDULE PROPERTY IN PURSUANT TO HER HUSBAND DEATH VIDE M R NO.20/2005 - 06 WHO IN TURN HAD ACQUIRED TH E SAME THROUGH RE GISTERED P A RTITION DEED DATED 16/03/2002, IN THE OFFICE OF THE SUB - REGISTRAR, BASAVANAGUDI, BANGALORE, THROUGH THE KATHA AND ALL OTHER REVENUE RECORDS AS STAND IN THE SOLE NAME OF VENDOR AT SL.NO.1, THE CHILDREN OF HER HUSBANDS BROTHERS WHO ARE VENDOR AT SL.NO.2 & 3 HAVE BEEN ARRAYED S PARTY TO THIS SALE DEED AS THE SCHEDULE PROPERTY IS THE ANCESTRIES PROPERTY OF THE VENDOR AT SL.NO.1. IT IS CLEAR THAT MRS.P.K.VIJAYALAKSHMI HAD ACQUIRED THE PROP E RTY WHICH WAS SOLD VIDE SALE DEED DATED 2/8/2010 BY WAY OF WILL OF HER HUSBAND AND ALL THE R E VENUE RECORDS WER E IN HER NAME ON THE DATE OF TRANSFER OF THE PROPERTY. HOWEVER, THE SALE CONSIDERATION WAS DIVIDED INTO THREE HANDS ALONG WITH HER NEPHEWS AND THE CAPI T AL GAINS HAVE B E EN DECLARED IN THREE HANDS AFTER CLAIMING EXEMPTION OF RS.50.00 LAKHS EACH IN THREE HANDS. I N VIEW OF THE FACT THAT ON THE FACT THAT ON THE DATE OF TRANSFER OF PROPERTY SHE IS THE OWNER OF THE HANDS AND THEREBY EXEMPTION U/S 54EC IS TO BE R E STRICTED TO RS.50.00 LAKHS. IT IS VERY CLEAR THAT THE ASSESSEE HAS DECLARED THE CAPITAL GAINS IN THREE HANDS TO CREATE SMOKE SCREEN FOR CLAIM OF EXEMPTION U/S 54EC IN THREE HANDS TO THE EXTENT OF RS.1,50,00,000/ - . THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE ENTIRE SALE CONSIDERATION SHOULD NOT BE TAXED ONLY IN HER HANDS. IN REPLY THE ASSESSEE HAS FILED A SUBMISSION MENTIONING THAT AS PER WILL, HE WAS GIVEN LIFE INTEREST IN THE PROPERTY AND SUBSEQUENT TO HER DE ATH A LL PROPERTIES DEVOLVE ON THE NEPHEWS H A D RIGHT TITLE AND INTER E ST O VER THE PROPERTY . HOWEVER, IN VIEW OF THE FACTS MENTIONED IN ABOVE PARAS, IT IS CLEAR THAT AS ON THE DATE OF TRANSFER ITA NO. 3 3 81 /BANG/201 8 4 OF THE PROPERTY NEPHEWS WERE NOT THE OWNER OF THE PROPERTY AND M RS.P.K.VIJAYALAKSHMI WAS THE ONLY OWNER , THE ENTIRE SALE CONSIDERATION NEEDS TO BE TAXED IN THE HANDS OF MRS.P.K.VIJAYALAKSHMI. ACCORDI N GLY, I HAVE REA S ON TO BELIEVE THAT THE INCOME OF RS.1,00,00,000/ - CLAIMED EXEMPTION U/S 54EC HAS ESCAPED ASSESSMENT FOR THE AY: 2011 - 12 WITH THE MEANING OF S E CTION 147 OF THE IT ACT, 1961 AND NEEDS T O BE BOUGHT TO TAX. 3. LD.AO WAS OF THE OPINION THAT, INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT, AS ENTIRE SALE CONSIDERATION SHOULD HAVE BEEN TAXED IN THE HANDS OF ASSESSEE ONLY, AND THEREFORE, THERE WAS A REASON TO BELIEVE THAT INCOME TO EXTENT OF RS.1CRORE, CLAIMED EXEMPT UNDER SECTION 54 EC, BY HER NEPHEWS, ESCAPED ASSESSMENT, WITHIN THE MEANING OF SECTION 147 OF THE A CT. ACCORDINGLY , NOTICE UNDER SECTION 142 (1) WAS ISSU ED FOLLOWED BY WHICH AUTHORIZ ED REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD. AO AND FILED REQUISITE DETAILS AS CALLED FOR . ASSESSEE IN RESPONSE TO NOTICE UNDER SECTIO N 148 FILED THE COPY OF OR IGINAL RETURN. ON RECEIPT OF REASONS RECORDED, ASSESSEE RESPONDED TO NOTICE BY SUBMITTING THAT, ASSESSEE ALONG WITH 2 NEPHEWS ARE LEGATEES TO THE WILL DATED 08/09/99 REGISTERED WITH SUB REGISTRAR, BAS AVANAGUDI BE NGALURU, BEARING REGISTRATION NO. 181/99 - 2000. IT WAS SUBMITTED THAT AS PER LAST WILL AND T ESTAMENT OF ASSESSEES HUSBAND, ASSESSEE ONLY HAD A RIGHT TO LIFE INTEREST AND ENTIRE PROPERTY WAS BEQUE A THED TO HER TWO NEPHEWS BEING, NIRANJAN S.PAMADI AND KIRAN S. PAMADI. IT WAS SUBMITTED THAT, SAID PROPERTY WAS SOLD BY AN INDENTUR ED DATED 02/08/2010, FOR A SUM OF RS.2,45,02,500/ - BY ASSESSEE ALONG WITH 2 NEPHEWS, AGAINST WHICH ASSESSEE RECEIVED SHARE FOR RELINQUISHING HER RIGHT TO LIFE INTEREST IN PROPERTY FOR WHICH, NEPHEWS DID NOT OBJECT. ITA NO. 3 3 81 /BANG/201 8 5 SUBSEQUENTLY, ASSESSEE IN HER RETURN OF INCOME FOR YEAR UNDER CONSIDERATION , DECLARED HER S HARE, AND CLAIMED EXEMPTION UNDER SECTION 54 EC TO THE EXTENT OF RS.50 LACS AS PER LAW . IT HAS BEEN SUBMITTED THAT, SIMILAR IS THE POSITION WITH 2 NEPHEWS, WHO WERE PARTIES TO THE SALE DEED. 4. LD.AO, UPON GOING THROUGH SUBMISSIONS ADVANCED BY ASSESSEE, WAS OF THE OPINION THAT, AS ON THE DATE OF TRANSFER OF PROP ERTY NEPHEWS WERE NOT THE OWNER BUT, ASSESSEE WAS THE ONLY OWNER AND HENCE THE ENTIRE SALE CONSIDERATION OF RS.2,45,02,500/ - IS TO BE TAXED IN THE HANDS OF ASSESSEE . HE ALSO HELD THAT EXEMPTION UNDER SECTION 54 EC RS. 50 LACS WA S AVAILABLE ONLY TO ASSESSEE AND NOT TO HER NEPHEW S . ACC ORDINGLY, ADDITION OF RS.1,83,41,082/ - WAS MADE IN THE HANDS OF ASSESSEE TOWARDS LONG TERM CAPITAL GAINS. 5. AGGRIEVED BY ADDITIO N MADE BY LD. AO ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) WHO UPHELD THE VIEW OF LD. AO. 6. AGGRIEVED BY ORDER OF LD . CIT ( A) , ASSESSEE IS IN APPEAL BEFORE US NOW. 7. AT THE OUTSET, IT IS SUBMITTED THAT, THERE IS A DELAY OF 34 DAYS IN FILING OF APPEAL, AS ASSESSEE WAS NOT WELL AND WAS UNDERGOING TREATMENT DURING RELEVANT PERIOD. CERTIFICATE OF DOCTOR DATED 27/09/18 HAS BEEN AN NEXED TO APPLICATION, FOR CONDONAT ION OF DELAY FILED BY ASSESSEE. IT HAS BEEN SUBMITTED THAT IT WAS UNDER THE SE CIRCUMSTANCES THAT APPEAL COULD NOT BE FILED ON TIME. LD.SR.DR THOUGH OPPOSED APPLICATION FOR CONDONATION OF DELAY, APPRECIATED THE FACT THAT RIGHT OF BEING HEARD MUST BE GRANTED TO ASSESSEE. 8. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. IT IS OBSERVED THAT ASSESSEE IS A ITA NO. 3 3 81 /BANG/201 8 6 SENIOR CITIZEN OF AGE 68 YEARS AND WAS NOT WELL DURING THE RELEVANT PE R IOD SHE HAD UNDERGONE SURGERY ON HER LEGS AND DUE TO HOSPITALISATION AND PERSISTENT SICKNESS , APPEAL COULD NOT BEEN FILED ON TIME . W E ARE THEREFORE, OF THE CONSIDERED OPINION THAT DELAY OF 34 DAYS DESERVES TO BE CONDONED. ACCORDINGLY WE ALLOW APPLICATION FOR CONDONATION OF DELAY. 9. LD.COUNSEL SUBMITTED THAT GROUND NUMBERS 2 AND 3 ARE EFFECTIVE GROUNDS REGARDING LEGAL ISSUE RAISED BY ASSESSEE AND ON MERITS. WE ARE THEREFORE , INCLINED TO CONSIDER ONLY THESE TWO GROUND S AND REST OF THE GROUND S ARE CONSIDE RED TO BE NARRAT IV E AND IN SUPPORT OF MAIN GROUNDS ARGUED BY LD.COUNSEL. 10. GROUND NO. 2 RAISED BY ASSESSEE IS IN RESPECT OF ASS UMPTION OF JURISDICTION UNDER SECTION 147 , WITHOUT THERE BEING ANY TANGIBLE MATERIAL/EVIDENCES FOR REOPENING. LD. COUNSEL ARGUED THAT LD.AO HELD EXEMPTION CLAIMED BY NEPHEWS UNDER SECTION 54 EC ESCAPED ASSESSMENT, WHICH IS DISCERNIBLE FROM RETURN OF INCOME AND THERE IS NO OTHER FRESH MATERIAL BASED UPON WHICH A REASON TO BELIEVE , OF INCOME HAVING ESCAPE D ASSESSMENT HAS BEEN FORMED. HE SUBMITTED THAT ASSESSING OFFICER DO NOT HAVE ANY JURISDICTION SINCE NO TANGIBLE MATERIAL CA ME TO HIS POSSESSION EXCEPT RETURN OF INCOME FILED BY ASSESSEE. HE SUBMITTED THAT EVEN THE REASONS RECORDED DO NOT CONTAIN ANY WHISPER OF ANY INDEPENDENT TANGIBLE MATERIAL , BASED UPON WHICH , I T IS DISCERNIBLE THAT INCOME ESCAPED ASSESSMENT. 11. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT ASSESSEES ORIGINAL RETURN WAS PROCESSED UNDER SECTION 143 (1) AND THEREFORE, HAVING REGARDS TO SALE DEED THAT SUBSEQUENTLY CAME TO THE NOTICE OF LD.AO, THERE WAS REASON TO BELIEVE THAT, INCOME HAS ESCAPED ASSESSMENT. HE SUBMITTED THAT LEGAL GROUND RAISED BY ASSESSEE ITA NO. 3 3 81 /BANG/201 8 7 WOULD NOT STAND THE TEST OF LAW AS RETURN OF INCOME FILED BY ASSESSEE DURING THE YEAR UNDER CONSIDERATION DID NO T CONTAIN DETAILS OF SALE PROCEEDS, WHICH REQUIRED FURTHER INVESTIGATION. 12. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. IN OUR CONSIDERED OPINION, WE AGREE WITH SU BMISSIONS ADVANCED BY LD.SR.DR. ORIGINAL RETURN FLED BY ASSESSEE WAS PROCESSED U/S 143(1) OF THE ACT AND THEREFORE, ASSESSING OFFICER HAD NOT VERIFIED THE DETAILS AT THAT STAGE. IT WAS LATER ON THAT SALE DEED CAME TO NOTICE OF ASSESSING OFFICER, WHICH WAS SUFFICIENT FOR FORMATION OF BELIEF. TH E ISSUE REGARDING CLAIM OF LONG TERM CAPITAL GAINS DEFINITELY REQUIRED FURTHER VERIFICATION, AND THEREFORE, WE CANNOT SUBSCRIBE TO THE ARGUMENT ADVANCED BY LD.COUNSEL THAT NOTICE UNDER SECTION 148 WAS BAD IN LAW. ACCORDINGLY, WE DISMISS GROUND NO. 2 RAIS ED BY ASSESSEE. 13. GROUND NO. 3 IS ON DISALLOWANCE MADE BY LD.AO.LD.COUNSEL SUBMITTED THAT ASSESSEES HUSBAND, LATE P.R.KUPPURAMASETTY OWNED SEVERAL MOVABLE AND IMMOVABLE PROPERTIES DURING HIS LIFE TIME AND EXECUTED A WILL DATED 08/09/99, ACCORDING TO WHI CH HE HAD GIVEN RIGHT TO LIFE INTEREST TO ASSESSEE , IN RESPECT OF ALL HIS MOVABLE AND IMMOVABLE PROPERTIES , WITHOUT ANY POWER TO MO RTGAGE , ENCUMBER O R ALIENATE THE SAME. THE WILL, FURTHER CLEARLY MENTIONS THAT ALL HIS PROPERTIES SHOULD GO TO HIS 2 NEPHEWS, AFTER DEATH OF ASSESSEE. HE REFERRED TO IN CLAUSE 5, 6, 7 OF THE WILL PLACED AT PAGE 70 - 77 OF PAPER BOOK WHICH READS AS UNDER: 5 . I DECLARE THAT MY WIFE SMT. P . K . VIJAYALAKSHMI AG E D ABOUT 57 YE A RS SHALL HAVE ONLY LIFE INTEREST IN RESPECT OF ALL THE MOVABLE AND IMMOVABLE PROPERTIES MENTIONED IN THE ITA NO. 3 3 81 /BANG/201 8 8 SCHEDULE PROVIDED H E REUN D ER. THAT ALL THE IMMOVABLE PROPERTIES AND ANY SHARE, INTERE ST, RIGHTS AND TITLES IN ANY OF THE IMMOVABLE PROPERTIES WHICH ARE NOT SPECIFICALLY MENTIONED HE R EIN AND TO WHICH I AM ENTITLED TO DURING MY LIFE TIME OR AFTER MY LIFE OR WHICH MAY FALL TO ME AFTER MY DEATH SHALL ALSO BE ENJOYED BY SAID WIFE. THAT SHE HAS NO POWER ABSOLUTELY TO ENCUMBER, MORTGAGE OR A LIENATE AN O THE MO V ABLE OR IMMOVABLE PROPERTIES. 6. I D ECL A RE THAT A FTER THE DEATH OF MY LIFE ALL THE MO V ABLE AND IMMOVABLE PROPERTIES WHICH ARE MENTION E D IN THE SCHEDULE SHALL GO TO MY N E PH EW S ( BROTHERS SONS) NAMELY SRI NIRNJAN S PAMADI S/O SRI P.R.SAMPANGIRAMA SETTY AND SRI KIAN S.PAMADI /O SRI P.R. SATHYANARAYANA SETTY TO THESE WHOM I HAVE GOT GREAT LOV E AND AFFECTION AS I HAVE OR WE HAVE NO CHILDREN OR MY OWN OR OUR OWN. THAT THESE CHILDREN O F MY BROTHERS HAVE ALWAYS SHOWN AND SHOWERED ON ME THAT ANY SON OR DAUGHTER MAY HAVE THE LOVE AND AFFECTION TOWARDS THE NATURAL PARENTS. I AM DELIGHTED WITH THEIR UPCOMING IN THE SOCIETY AS THE GOOD CITIZEN. THAT IN THE EVENT OF DEATH OF MY WIFE BEFORE MY DEATH I.E. PRE - DECEASING ME, ALL THE MOVABLE AND IMMOVABLE WHICH ARE STANDING IN MY NAME AND TO THOSE WHICH I AM ENTITLED TO, SHALL IMMEDIATELY GO TO MY SAID N E PHEWS NAMELY KIRAN S PAMADI AND SRI NIRANJAN S PAMADI IN EQUAL SHARES. 7. I DECLARE THAT AFTER MY DEATH, MY N E PHEWS SHALL HAVE GOT ABSOLUTE RIGHT IN THE PROPERTIES AND THAT THEY SHALL BE EN TI TLED TO ENJOY THE SAME WITHOUT ANY LET OR HINDRANCE AND THAT THEY SHALL LO BE ENTITLED TO CHANGE THE KHATA IN THEIR NM IN THE RECORDS OF THE BANGALORE MAHANAGARA PALIKE. THAT THEY SHALL HAVE THE ABSOLUTE RIGHT AND INTEREST/POW E R TO ALIENATE THE SAID PROPERTIES IN ANY MANNER THEY LIKE DURING THEIR LIFE TIME. ITA NO. 3 3 81 /BANG/201 8 9 14. LD.COUNSEL VEHEMENTLY SUBMITTED THAT, ASSESSEE ONLY H AD RIGHT TO LIFE INTEREST IN THE PROPERTY, AND 2 NEPHEWS WERE ACTUALLY HAVING RIGHT TO TRANSFER THE IMMOVABLE PROPERTY WHICH WAS SOLD JOINTLY BY ALL 3 OF THEM VIDE SALE DEED DATED 02/08/2010, FOR TOTAL CONSIDERATION AMOUNTING TO RS.2,45,02,500/ - , I N SUPPORT OF HIS CONTENTIONS HE PLACED RELIANCE UPON DECISIONS OF; HONBLE SUPREME COURT IN CASE OF KARMI VS AMRU & OTHERS DATED 05/01/71; HONBLE SUPREME COURT IN CASE OF CGT VS ANUSUYA SARABHAI DATED 13/03/97; CALCUTTA HIGH COURT IN CASE OF CWT VS K. A. G.ARATOON REPORTED IN (1994) 210 ITR 346 15. LD. C OUNSEL PLACING RELIANCE UPON A BOVE DECISIONS , SUBMITTED THAT , ACTUAL BENEFICIARIES TO ALL IMMOVABLE AND MOVABLE PROPERTIES OWNED BY ASSESSEES HUSBAND WERE T WO NEPHEWS , AND ASSESSEE WAS ONLY HOLDING RIGH T TO LIFE INTEREST . IT WAS SUBMITTED THAT , THE BENEFICIARIES PAID ASSESSEE HER SH A RE OF SALE PROCEEDS IN LIEW OF ASSESSEE RELINQUISHING HER RIGHT TO LIFE INTEREST IN THE PROPERTY. 16. ON THE CONTRARY , LD.S R . DR REFERRING TO RELEVANT CLAUSES OF WILL SUBMITTED THAT , ASSESSEE T RANSFERRED PROPERTY FOR WHICH SHE DID NOT HAVE ANY RIGHT TO DO SO. HOWEVER, ASSESSEE IS THE OWNER AFTER HER DECEASED HUSBAND, AND ENTIRE SALE PROCEEDS SHOULD HAVE BEEN DECLARED IN THE HANDS OF ASSESSEE. REFERRING TO SECTION 54 EC OF THE ACT LD. S R. DR SUBMITTED THAT , SECTION VERY SPECIFICALLY CATEGORI Z ES EXEMPTION AVAILABLE ONLY TO THE EXTENT OF 50 LAKHS , AND IN PRESENT CASE , ASSESSEE ALONG WITH TWO NEPHEWS CLAIMED ITA NO. 3 3 81 /BANG/201 8 10 EXEMPTION UNDER SECTION 54 E C T O THE EXTENT OF RS. 50 LACS EACH , WHICH IS NOT PERMISSIBLE AS PER LAW. HE THUS SUPPORTED VIEW TAKEN BY AUTHORITIES BELOW. 17. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. THERE IS NO DISPUTE THAT PROPERTY SO LD I S A LONG TERM CAPITAL ASSET. I N PRESENT FACTS , AS WE ANALYZ E IT THREADBARE, WHAT NEEDS TO BE DETERMINED IS WHETHER RIGHT TO LIFE INTEREST IN A PROPERTY WOULD CONSTITUTE CAPITAL ASSET OR NOT. IN THE PRESENT FACTS OF CASE ASSESSEE RELINQUISHED HER RIGHT TO LIFE INTEREST IN THE IMMOVABLE PROPERTY WHILE THE TWO NEPHEWS TRANSFERRED THE RIGHT TO TITLE, THEY POSSESSED BY VIRTUE OF WILL OF THEIR DECEASED UNCLE IN THE PROPERTY. IN OUR OPINION EACH OF THEM POSSESSED A KIND OF RIGHT IN THE PROPERTY WHICH WA S TRANSFERRED BY VIRTUE OF SALE DEED DATED 02/08/2010, WHICH CONSTITUTE S CAPITAL ASSET WITHIN THE DEFIN ITION OF SECTION 2 (14) OF THE A CT. IN OUR OPINION, WORD, PROPERTY DOES NOT MEAN, MERELY PHYSICAL PROPERTY, BUT ALSO MEANS RIGHT FOR ANY KIND , TITLE OR INTEREST IN IT. I F A PERSON IS AN ABSOL UTE OWNER OF THE PROPERTY, IT CAN BE SAID THAT HE HAS ALL RIGHTS AND INTEREST IN THAT PROPERTY. IN THE PRESENT FACTS OF CASE, ASSESSEE OWNS RIGHT TO LIFE INT EREST, AND TWO NEPHEWS POSSESS RIGHT TO TRANSFER THE TITLE IN THE PROPERTY , AS PER LAST WILL AND TESTAMENT OF DECEASED HUSBAND OF ASSESSEE. IN OUR VIEW, RIGHT TO LIFE INTEREST POSSESSED BY ASSESSEE IS A RIGHT IN PERSONAM THAT HAS TO H AS TO BE RELINQUISHED , IN ORDER TO ABSOLUTE LY TRANSFER THE PROPERTY , WITH A CLEAR TITLE TO THE BUYERS. IN OUR VI E W UNLESS ASSESSEE TR A N S FERS RIGHT TO LIFE INTEREST , PROPERTY SOLD WILL NOT BE TRANSFERRED TO BUYERS IN ENTIRETY, FREE OF ALL/ANY ENCUMBRANCES . THE WILL EXECUTED BY DECEASED HUSBAND OF ASSESSEE, VERY CATEGORICALLY ITA NO. 3 3 81 /BANG/201 8 11 MENTIONS THAT, ASSESSEE DO NOT POSSESS ANY RIGHT TO TRANSFER, ENCUMBER, MORTGAGE OR ALIENATE ANY OF THE IMMOVABLE PROPERTIES , A ND POWER TO TRANSFER VESTS ONLY WITH TWO NEPHEWS , TO WHOM T HE PROPERTY HAVE BEEN BEQUEATHED BY DECEASED HUSBAND OF ASSESSEE. ASSESSEE BEFORE US AND TWO NEPHEW POSSES DIFFERENT KINDS OF RIGHTS IN THE PROPERTY SOLD. IN ORDER TO TRANSFER CLEAR TITLE, FREE FROM ALL ENCUMBRANCES TO THE BUYER, ASSESSEE ALSO HAS TO RELINQUISH HER RIGHT TO LIFE INTEREST IN THE PROPERTY FOR WHICH THE TWO NEPHEWS HAVE GIVEN A SHARE OF SALE PROCEEDS. THIS HAS TO BE SEEN AS AN UNDERSTANDING BETWEEN ASSESSEE AND TWO NEPHEWS ASSESSEE THUS RIGHTLY , CL A IMED EXEMPTION U/S 54EC AGAINST THE HE R SHARE OF SALE PROCEEDS ON SALE OF RIGHT TO LIFE INTEREST IN THE P ROPE RTY, W HICH SHE DECLARED AS LTCG . THERE CANNOT BE ANY DI S PUTE THAT EACH OF THE THREE VENDORS HAVE RECEIVED THEI R RESPECTIVE SHARES FOR SALE OF RIGHTS POSSESSED BY EACH ONE OF THEM TO THE BUYERS AGAINST WHICH EACH ONE OF THEM CAN CLAIM EXEMPTION U/S 54ECS INDEPENDENTLY. 18. ON THE BASIS OF AFORE STATED DISCUSSIONS AND ANALYSIS , WE ARE OF CONSIDERED OPINION , THAT THE RECEIPTS HAVE BEEN RIGHTLY DECLARED BY ASSESSEE . ACCORDINGLY , WE ARE OF THE OPINION THAT THE ADDITION DESERVES TO BE DELETED ON THE BASIS OF ABOVE DISCUSSIONS. ACCORDINGLY, GROUND NO.3 RAISED BY ASSESSEE STANDS ALLOWED. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS PARTLY ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON (A.K.GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE *AM ITA NO. 3 3 81 /BANG/201 8 12 COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) 7.GUARD FILE BY ORDER ASST. REGIST RAR DATE 1. DRAFT DICTATED DIRECTLY ON COMPUTER SYSTEM 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 11. DRAFT DICTATION SHEETS ARE ATTACHED ITA NO. 3 3 81 /BANG/201 8 13