TMI Blog2016 (5) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as Gift in terms of Sec.49(1)(ii) of the Act and accordingly, Explanation-1(i)(b) to Sec.2(42A) to be applied so as to compute the holding period of the asset after considering the holding period of the said capital asset by previous owner i.e. SETTLOR. In the present case, the date from which SETTLOR holding the title over the Registered Trade Mark PREETT is not available on record and we are not in a position to give a finding whether transfer of this Trade Mark by the present assessee would give rise to short/long term capital gains. Hence, this issue is remitted to the file of AO to determine the period of holding of this impugned capital asset and decide the issue afresh. - I.T.A.No.2074, 2075/Mds./2015 - - - Dated:- 11-5-2016 - SHRI CHANDRA POOJARI AND Shri Duvvuru RL Reddy, JJ. Appellant by : Mr. R. Vijayaraghavan, Advocate Respondent by : Mr. Sundar Rao, CPT, DR ORDER CHANDRA POOJARI, J. These two appeals filed by different assessees are directed against the different orders of the Ld.CIT(A)-8, Chennai, both order dated 14.09.2015 for same assessment year 2012-13 passed u/s.143(3) of the Income Tax Act, 1961. Since issues i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed only where the capital gains arise from long term capital assets. (c) Meaning of gift is to be strictly adhered to and definition given in the Gift tax Act cannot be imported into the Income tax Act (d) Transfer of trade mark was done with mala fide intention to evade tax. Therefore, the AO disallowed the claim u/s.54F of ₹ 8 crores in respect of assessee viz. Shri T.T.Siddarth and of ₹ 36.99 crores in respect of assessee viz. Shri Maya Varadarajan. Aggrieved with the action of the AO, the assessees were filed appeals before the Ld.CIT(A). 3.3 On appeal, Ld.CIT(A) observed that the primary issue that needs to be settled is whether the capital asset received by the assessee through a settlement deed is a gift, if so, whether the provisions of section 49(1) of the Income Tax Act apply to this case. Transfer under the Income Tax Act is defined at Section 63 as under: Transfer and revocable transfer defined. For the purposes of sections 60, 61 and 62 and of this section,- (a) a transfer shall be deemed to be revocable if- i) it contains any provision for the re-transfer directly or indirectly of the whole or any part of the income or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... author in respect of a single property during his life time, though only the last Will executed becomes operative. Whereas, settlement is not revocable and after the proper execution of a settlement deed, the Settler relinquishes all his rights, title and interest over the said property, subject to the terms conditions contained in the settlement deed. Partition v/s settlement Usually partition of joint properties is mistaken for settlement. However, partition constitutes division of properties between the joint owners as well as the division of joint interest ownership in the property. Thus, the division amounts to severance of the joint interest in the ownership of the common properties and the common property is thus divided among them. Each partner becomes the absolute owner of his share and each partner s share is subject to a predetermined percentage, governed by either the inheritance laws or by the partnership deed as the case may be. In settlement, however, the property is owned by a third person and is settled in favour of persons who do not have any previous interest in the said property and the share of the beneficiary is as per the wishes of the settler. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be the cost for which the previous owner of the prop arty acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as ,the case may be. Once it is held that settlement cannot be considered as a gift the question of applying provisions of Sec 49(1) does not arise. On the other hand what apply in the case of appellant are sections 2(42A) and 2(42B), the relevant portions of which are reproduced below: (42A) short-term capital asset means a capital asset held by an assessee for not more than [thirty-six] months immediately preceding the date of its transfer: [Explanation 1].-(i) In determining the period for which any capital asset is held by the assessee- (a) - - - (b) in the case of a capital asset which becomes the property of the assessee in the circumstances mentioned in sub-sectlon (1) of section 49, there shall be included the period for which the asset was held by the previous owner referred to in the said section; (42B) Short -term capital gain means capital gain arising from the transfer of a short -term capital asset; 3.7 The Trade Mark (capital asset) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. DCIT in ITA No.2075/Mds./2014 vide order dated 15.05.2015 observed that though the assessee got the landed property while settlement dated 23.01.2004 from his mother for the purpose of computation of indexed cost of acquisition from 01.04.1981 by following the judgment of Bombay High Court in the case of Manjula J. Shah reported in (2012) 204 Taxman 691. Further the Co-ordinate Bench in the case of Mr.Abdul Hameed Khan Mohammed (supra), it is categorically held that transfer of property made voluntarily and without consideration by way of Settlement Deed, all within the definition of 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 also from the Cochin Bench of Tribunal in the case of ACIT Vs. Anjana Mohan (2013) 36 CCH 0008(Cochin) and also Redington (India) Ltd. Vs. JCIT reported in 40 CCH 527 (Chennai). 4.3. In view of this, in our opinion the artificial distinction made by the lower authorities with reference to the Gift and Settlement is not appropriate and we are of the opinion that for the purpose of Sec.49(1)(ii), there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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