TMI Blog2008 (3) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... mesh Pai and is married. Mr. T. Ramesh Pai was assessed to tax in the status of HUF that had investment in shares of Reliance India Ltd., Karnataka Consumer Products Ltd. and others including ICDS Ltd., a concern in which family members are interested as shareholders, directors, etc. The issue revolves around 56,149 shares of ICDS Ltd. for which the assessee received Rs. 220 per share and the total consideration was Rs. 1,23,52,780. The Pai Group of Mangalore had two families, namely, Mohandas Pai and Ramesh Pai. There were disputes between the two families of the group and the two families wanted a settlement to the effect that the various business and other activities of the family should be divided between the two families with no inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Ltd. vs. Jt. CIT, ITA No. 750/Bang/1999, dt. 5th Oct., 2001. I have carefully gone through the decision of the Hon'ble Tribunal. Firstly, the decision is not applicable on the facts of the present tax. The assessee before the Tribunal was an investment company. In the present case, the assessee is an individual who is also not a coparcener. Investment companies are vehicles of controlling/holding shares in other companies. The purpose may be to control the other companies through the investment company. The funds are made available to the investment company by the group concerns/family members either as share capital or by way of loans and advances. Thus, the funds are common and keep on rotating. In the case of the appellant position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitration involved division of various activities including business between the two families with the entire exclusion of the other family. There was a clear demarcation that neither of the families would thenceforth interfere with the business and other activities of the other family. The broad purpose of arbitration was to effectively transfer the control and management of the companies, the shareholding of one group in the companies controlled by the other group will be sold to the controlling group. Likewise, the directors will also resign from the companies controlled by the other group to enable the controlling group to reconstitute the board of directors according to their wishes. This arrangement is also applicable to the subsidia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to majority of shares and there were other shares on which identical situation, identical evaluation was made by the arbitrator. 4. The above goes to show that consequent to differences between the two family groups, a situation had developed requiring the two family groups to identify their interests with clear understanding that they will not dabble in the affairs of the other family group. The assessee is a daughter of Ramesh Pai Group is an accepted position and all that she had in the shape of shares etc., in companies had to be handed over to Mohandas Group. From that point of view, the assessee being a member of Ramesh Pai Group, had to be roped in and she had to abide by the award of the arbitrator for the sole purpose of en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement must be voluntary and should not be induced by fraud, coercion or undue influence; 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". In the instant case, notwithstanding the fact that the assessee is a married woman, and be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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