DOULATRAM CHELLARAM CHHABRIA, MUMBAI V. ITO WD 14(1)(3), MUMBAI

ITA 7311/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3389 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-05-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 01-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MOHAN V TANDON

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 7311/MUM/2011 ASSESSMENT YEAR : 2007-08 DOULATRAM CHELLARAM CHHABRIA 22A NEETA BUILDING, 90 MARINE DRIVE MUMBAI- 400002 PAN :AAAPC 5085 H VS. ITO WARD 14(1)(3) 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT MUMBAI- 400021 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MOHAN V. TANDON RESPONDENT BY : SHRI RAJENDRA KUMAR DATE OF HEARING : 02.05.2013 DATE OF PRONOUNCEMENT : 17.05.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A) -25, MUMBAI DATED 16.09.2011 FOR THE A.Y. 2007-08. 2. GROUND NO. 1 RELATES TO TREATING A SUM OF RS.5,0 0,000/- RECEIVED BY THE ASSESSEE ON ACCOUNT OF LEGACY AS DIRECTED IN THE W ILL OF HIS LATE FATHER AS INCOME FROM OTHER SOURCES BY THE AO AND THE SAME CONFIRM ED BY THE LD.CIT(A). 3. BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL ENGA GED IN THE BUSINESS ACTIVITY OF FINANCE TO TRADERS AND BUSINESSMAN HAD SHOWN A RECE IPT OF RS.5 LACS ON ACCOUNT OF LEGACY UNDER THE HEAD CAPITAL ACCOUNT FOR THE YEA R UNDER CONSIDERATION. HOWEVER, IN THE ASSESSMENT FRAMED U/S 143(3), THE AO TREATED THE IMPUGNED RECEIPT AS INCOME FROM OTHER SOURCES AND THUS ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD.CIT(A) CONFIRMED THE AC TION OF THE AO. AGGRIEVED BY THE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO. 7311/MUM/2011 DOULATRAM CHELLARAM CHHABRIA A.Y. 2007-08 2 4. BEFORE US, THE LD. AR HAS STATED THAT THE ASSESS EE HAS RECEIVED THE SUM BY VIRTUE OF HIS FATHERS WILL AND ACCORDING TO THE DIRECTION OF THE WILL, ALL FIVE SISTERS HAVE PAID RS. 1 LAC EACH TO THE ASSESSEE AND THEREF ORE, THE AMOUNT IS NOT TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. ON THE OTHER HAND, THE LD. DR HAS STATED THAT THE IMPUGNED AMOUNT HAS BEEN RECEIVED B Y THE ASSESSEE BY VIRTUE OF HIS APPOINTMENT AS EXECUTOR OF THE WILL AND THUS THE RECEIPT IS REVENUE IN NATURE. THE LD.CIT(A) HAS CORRECTLY HELD THE IMPUGNED RECEI PT IS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE TO BE DECIDED BY US IS WHETHER THE ASSESSEE H AS RECEIVED THE IMPUGNED RECEIPT FOR THE SERVICES RENDERED BY HIM AS AN EXEC UTOR OF THE WILL OR AS A BENEFICIALLY OF THE WILL. THE RELEVANT CLAUSE OF THE WILL UNDER WHICH THE ASSESSEE HAS RECEIVED THE IMPUGNED SUM IS EXTRACTED HEREUNDE R: IN THE EVENT MY WIFE THE SAID MRS. MENAWATI CHELLA RAM CHHABRIA PREDECEASES ME AND I BECOME ABSOLUTELY AND EXCLUSIV ELY ENTITLED TO THE ABOVE SAID FLAT NO. 21 AND THE SAID GARAGE NO.6 AS FORESAID, I GIVE DEVISE AND BEQUEATH MY SHARE, RIGHT TITLE AND INTEREST INT O AND UPON THE SAID FLAT NO. 21 AND SAID GARAGE NO. 6 IN THE MANNER STATE D AS FOLLOWS: A) I BEQUEATH 1/3 RD SHARE (EQUIVALENT TO 33.33%) IN THE SAID FLAT NO. 21 TO MY SON THE SAID MR. KHUSHAL CHELLARAM CHHABRIA; B) I BEQUEATH 1/3 RD SHARE (EQUIVALENT TO 33.33%) IN THE SAID FLAT NO. 21 TO MY SON THE SAID MR. CHANDU CHELLARAM CHHABRIA; C) I BEQUEATH 1/3 RD SHARE (EQUIVALENT TO 33.34%) IN THE SAID FLAT NO. 21 AND ALSO BEQUEATH MY FULL SHARE (EQUIVALENT TO 100%) IN THE SAID GARAGE NO. 6 TO MY SAID DAUGHTERS IN EQUAL PROPORTIONS. HOWEVER, PROVIDED MY SON THE SAID MR. CHANDU CHELLA RAM CHHABRIA AND MY SAID DAUGHTERS COLLECTIVELY PAY A SUM OF RS.5,00,00 0/- (RUPEES FIVE LAKHS ONLY) EACH TO MY SONS THE SAID MR. GOPICHAND CHELLA RAM CHHABRIA AND THE SAID MR. DAULAT CHELLARAM CHHABRIA AS THEY HAVE NOT BEEN GIVEN ANY SHARE IN THE SAID FLAT NO. 21 AND GARAG NO.6 UNDER THIS MY LAST WILL AND TESTAMENT. FURTHER, AS A MATTER OF CLARIFICATION TO WHAT IS ST ATED HEREINABOVE MY SONS THE SAID MR. GOPICHAND CHELLARAM CHHABRIA AND THE SAID MR. GOPICHAND ITA NO. 7311/MUM/2011 DOULATRAM CHELLARAM CHHABRIA A.Y. 2007-08 3 CHELLARAM CHHABRIA AND THE SAID MR. DAULAT CHELLARA M CHHABRIA WILL INDIVIDUALLY GET RS.5,00,000/- (RUPEES FIVE LAKHS O NLY) AS AFORESAID (I.E. THE SAID MR. GOPICHAND CHELLARAM CHHABRIA WILL GET RS.5 ,00,000/- (RUPEES FIVE LAKHS ONLU) AND THE SAID MR. DAULAT CHELLARAM CHHAB RIA WILL GET RS.5,00,000/- (RUPEE FIVE LAKHS ONLY) IT IS FURTHER CLARIFIED MY SON THE SAID MR. CHANDU CHELLARAM CHHABRIA SHALL IN HIS PERSONAL CAPACITY B E INDIVIDUALLY AND EXCLUSIVELY LIABLE TO REMIT THE SAID AMOUNT NOT EXC EEDING RS.5,00,000/- (RUPEES FIVE LAKHS ONLY) AND MY SAID DAUGHTERS SHAL L IN THEIR PERSONAL CAPACITY COLLECTIVELY BE EXCLUSIVELY LIABLE TO REMI T THE SAID AMOUNT NOT EXCEEDING RS.5,00,000/- (RUPEES FIVE LAKHS ONLY) IN THE MANNER MENTIONED HEREINABOVE. THE PERUSAL OF THE ABOVE CLEARLY INDICATES THE BEQU EATHING OF THE PROPERTY MENTIONED IN THE WILL IS CONDITIONAL ON THE FULFI LLMENT OF THE CONDITION OF PAYING 5 LACS COLLECTIVELY BY MR. CHANDU CHELLARAM CHABRIA A ND THE OTHER DAUGHTERS TO THE ASSESSEE. THIS CLEARLY INDICATES THAT THE FATHER OF THE ASSESSEE HAS INTENDED TO CONFER THE SAID BENEFIT TO THE ASSESSEE IN VIEW OF THE FACT THAT HE HAS NOT GIVEN A SHARE IN THE SAID FLAT TO THE ASSESSEE. IN VIEW OF THAT MATTER, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS RECEIVED T HE IMPUGNED AMOUNT AS A RESULT OF A LEGACY CONFERRED BY THE WILL OF HIS FATHER W HICH NECESSARILY FALLS IN THE NATURE OF CAPITAL ACCOUNT. ACCORDINGLY WE DELETE THE IMPUG NED ADDITION. THUS, GROUND NO. 1 IS ALLOWED. 6. GROUND NO. 2 IS NOT PRESSED BY THE ASSESSEE AND HENCE REQUIRES NO ADJUDICATION. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF MAY, 2013. SD/- SD/- (P.M.JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 17.05.2013. *SRIVASTAVA ITA NO. 7311/MUM/2011 DOULATRAM CHELLARAM CHHABRIA A.Y. 2007-08 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.