TMI Blog2010 (4) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement. It was also seen that the assessee had invested a sum of ₹ 1 crore in NBH Capital Gain Bonds. 4. During the course of assessment proceedings, the assessee was asked to furnish all the relevant evidences/documents with respect to the so-called family settlement and the details of the amount being received alongwith bank statement etc. The assessee vide his AR s letter dt. 8.8.2006 submitted his reply and has given the details of antecedents of the assessee, the family background and the details of family settlement alongwith evidences. 5. The facts of the case are that the assessee s grandfather Shri Govindrao O. Ambulkar had created a trust on 15.1.1970 to look after his family members and the family business. The beneficiaries of the said trust were his wife, Indirabhai, two sons, Shri Prabhakar Ambulkar and Shri Navinchandra and six daughters or the successive legal heirs of the above stated beneficiaries. Shri Govindrao expired on 1.2.1970. After the death of Shri Govindrao, the family business and the properties were managed by the Executors of the said Goivindrao Ambulkar Trust. The assessee is the son of Shri Prabhakar G. Ambulkar. Shriu Prabhakar Amb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gain for the following reasons: (i) The assessee has relinquished his right to receive royalty from the family business. (ii) The relinquishment of right is considered as transfer as per Sec. 2(47) of the I.T. Act. (iii) The crucial requirement for considering whether it is a capital gain or not u/s. 45 is that there must be a transfer must be of a capital asset. Even a right to obtain conveyance of immovable property is clearly a property as contemplated by Sec. 2(14) of the I.T. Act. The expression transfer of property includes the passing of right in property from one person to another person. The profit that arises specially from the sale, exchange or relinquishment of capital asset or the extinguishment of any right therein is a subject matter of case u/s. 45 of the Act. The relinquishment of an asset amounts to its transfer u/s. 2(14) of the Act. The relinquishment takes place when the owner withdraws himself from the property and abandons his right thereto. Therefore, in this case, capital gains arise out of relinquishment of rights of ₹ 2,25,00,000/- is liable for tax u/s. 45 of the I.T. Act, 1961 after allowing deduction u/s. 54EC being investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a consideration for transfer of any assets. This issue has already been taken up and dealt with by the AO as above. The AR has himself admitted in the submissions as above that the amount is received as a beneficiary of the trust on reaching a family settlement regarding the property of the trust and income therefrom. The property of the trust and the income therefrom do constitute the asset which position cannot be disputed. The AR has also submitted vide para (b) that Se. 2(14), 2(47) and Sec. 45 are not applicable. However, no reason whatsoever has been provided in support of the contentions that these provisions are not applicable and the arguments of the AO have not been rebutted. The AR has asserted that the order of the AO is incorrect but without pointing out any specific error thereon. Vide para (d) the AR has laid a great emphasis upon the fact that the AO has accepted the position of disputes among the family members. However, there is no such clause which exempts the determination of capital gains in case of family disputes. However, the facts stated by the AR that the Court Receiver was appointed that the appellant had received the property as a beneficiary of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 S.C. 1836), the Supreme Court has held as follows: It is well settled that a compromise or family arrangement is based on the assumption that there is an antecedent title of some sort in the parties and the agreement acknowledges and defines what that title is, each party relinquishing all claims to property other than that falling to his share and recognizing the right of the others, as they had previously asserted it, to the portions allotted to them respectively. 16. In the case of Kale Vs Dy. Director of Consolidation (AIR 1976 S.C. 807), the Supreme Court has held as follows: The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the Courts will find no difficulty in giving assent to the same. 17. The Madras High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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