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2018 (11) TMI 112 - ITAT CHENNAITaxability of transfer of shares by means of family arrangement - capital gains - inequalities of distribution of shares was compensated monetarily - reopening of assessment after revision u/s 263 - Held that:-Whatever may be the reason, when the higher authority, namely, Commissioner, found that there was family arrangement and the source for investment is the funds received consequent to the family arrangement, the Assessing Officer cannot ignore the same. Therefore, reopening of assessment under Section 147 of the Act, cannot stand for scrutiny of law. Consequently, the order passed by the Assessing Officer after reopening of assessment on issue of notice under Section 148 of the Act cannot stand for legal scrutiny. Accordingly, we hold that the reopening of the assessment under Section 147 of the Act is invalid When there was family arrangement between the assessee and his brother, and the inequalities of distribution of shares was compensated monetarily, this Tribunal is of the considered opinion that there was no transfer within the meaning of Section 2(47) of the Act. Therefore, the same cannot be brought to taxation under any of the provisions of Income-tax Act. Accordingly, the order of the CIT(Appeals) is confirmed on this issue. Non-compete fee as a part of the family settlement - When the CIT(Appeals) found that the compensation received by the assessee is not taxable under Income-tax Act, it is not known why the non-compete fee received by the assessee is to be taxed under the Income-tax Act. This Tribunal is of the considered opinion that even though it was referred as non-compete fee, it is only a part of family settlement to settle the dispute once for all and to bring peace in the family . They anticipated that allowing the assessee to establish another cement factory in the near future may create a friction in the family and therefore, certain amount in cash was paid. This Tribunal is of the considered opinion that what was paid to the assessee is only a part of family settlement arising out of agreement dated 12.08.2009, therefore, the same also cannot be brought to taxation. In other words, what was paid to the assessee is consequent to the family settlement dated 12.08.2009. Hence, the same is not liable for taxation. Reopening of assessment after the order of the Administrative Commissioner under Section 263 of the Act is invalid. Hence, we are unable to uphold the orders of the lower authorities. - Decided in favour of assessee
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