TMI Blog2011 (3) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of appeal raised by the assessee read as follows: "1. On the facts and in the circumstances of the case and in law the CIT(Appeals) 27/16(1)/2 erred in confirming the addition of Rs. 3,73,95,334/- as an amount chargeable under section 56(2)(v) of the Income Tax Act. 2. The CIT(Appeals) 27/16(1)/2 failed to appreciate that the withdrawal by the appellant of his caveat thereby enabling Mr. Rajesh Karsandas Bhavsar(hereinafter referred to as the "said Bhavsar") to apply for and obtain Letters of Administration to the estate of the deceased Mr. Mani Cawas Bamji and also to apply for and obtain probate of the will of the deceased Mr.Dinshaw Jamshedji Mistry was the consideration which made the said Bhavsar pay the said amount of Rs.4,78,80,000 to the Appellant and in any event was to be regarded as received by way of inheritance. 3. The CIT(Appeals) 27/16(1)/2 erred in holding that the Appellant" willingly offered to surrender the amount for taxation and also submitted as cheque of Rs.1,60,46,844/- dated 28/11/07 drawn HSBC Bank, Mumbai." 4. The CIT(Appeals) 27/16(1)/2 failed to appreciate that the amount of Rs.1,60,46,840/- was collected by Mr. Karun Kant Ojha, Deput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 2/5/1997 is not valid. On such objection being filed Petition No. 387 of 2001 was converted into a testamentary suit being TIL suit No. 27 of 2001. 3. The assessee also filed a notice of motion for restraining Mr. Dinshaw Jamshedji Mistry by an order of injunction from transferring, disposing, alienating etc. of the shares, operating bank lockers and dealing with properties of the deceased Mrs. Mani Cawas Bamji. The Hon'ble High Court by order dated 21/2/2000 restrained Mr.Dinshaw Jamshedji Mistry from dealing with properties of the deceased. 4. On 28/9/2002 Mr. Dinshaw Jamsheji Mistry died. During his life time he had executed his last will and testament dated 29/10/2001 appointing Mr. Rajesh K. Bhavsar as the sole executor and legatee. Mr.Rajesh K.Bhavsar got himself impeded as plaintiff in PIL Suit No. 27 of 2001 before Hon'ble Bombay High Court for granting of probate of the last will testament of Mrs. Mani Cawas Bamji in place of Dinshaw Jamsheji Mistry. 5. Mr. Rajesh K. Bhavsar and the assessee entered into a compromise whereby the assessee agreed to receive a sum of Rs.5,08,80,000/- in consideration for agreeing to the Court granting probate in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its earlier order restraining D.J.Mistry from alienating any part of the estate of the deceased Mrs. Mani Cawas Bamji, permitting Mr.R.K.Bhavsar to alienate some of the properties to enable him to raise funds to discharge the obligation to pay monies to the Assessee. In this order the Hon'ble Court has recorded that the compromise and has held that the consent terms are lawful. The Assessee on receipt of agreed sum, has to withdraw his caveat to enable issue of Letters of Administration with the Will annexed in respect of the estate of the deceased Mrs.Mani Cawas Bamji. 7. We have already seen that one of the property belonging to Mrs.Mani Cawas Bamji was the property known as "Avasia House" at Nepean Sea Road, Mumbai. Mr.R.K.Bhavsar had entered into a agreement for sale of this property to an entity belonging to "Orbit Group". In a search at the premises conducted by the Revenue u/s.132 of the Act, it was noticed that "Avasia House" was agreed to be sold to Orbit Group. It also transpired that Mr.R.K.Bhavsar had paid a sum of Rs.4,78,80,000/- to the Assessee, the details of which have already been set out in the earlier part of this order. In a statement recorded during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement, hence, should be treated as an inheritance and should not be taxed u/s. 56(2)(v). This contention of the appellant's counsel is not acceptable as the appellant had not filed a case in the court, but only a caveat against the probation of the will. Hence, he could not be said that he had contested the will and received the sum as an inheritance. He had only received the sum of money for withdrawing his caveat from the court and not creating a nuisance for Mr. Rajesh K. Bhavasar and delaying his getting his will Mr. Rajesh K. Bhavasar as per his statement had paid the appellant the money so that he should not create hurdles for him and delay in getting the inheritance. The provisions of sec. 56(2)(v) are clearly attracted in this case as the money has not been received as a legal inheritance and as stated by the AO he was only a close relative and not a legal heir mentioned in the will and as claimed by the appellant. Hence, the action of the AO in taxing this amount u/s. 56(2)(v) is absolutely correct and is upheld and this ground of appeal of the appellant is dismissed. Their other argument that this money had accrued in the earlier years when the agreement was reached and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (vii) spouse of the persons referred to in clauses (ii) to (vi). 13. Thus prior to 1-9-2004, receipts of any sum of money would not be income u/s.56(2)(v) of the Act. The disputed receipts of Rs.3,73,95,334.15 Ps. were received after 1-4-2005 and upto 19/10/2005. A sum of Rs.1,04,77,032.28 Ps. were received between 3/4/2003 to 14/10/2003. Therefore these receipts could not be taxed as income u/s.56(2)(v) of the Act. As far as the sum of Rs.3,73,95,334.15Ps. is concerned, the taxability of the said sum has to be examined in the light of the provisions of Sec.56(2)(v) of the Act. The condition precedent to attract the main provisions of Sec.56(2)(v) of the Act, are that the receipt of any sum of money should be "without any consideration". The question is was there any consideration for the receipt of money by the Assessee. 14. It was the contention of the ld. Counsel for the assessee that the sum received by the assessee was in consideration of the assessee withdrawing the caveat filed in the proceedings for grant of Probate/Letters of Administration in respect of will of late Mani Cawasa Bamji. In this regard ld. Counsel for the assessee drew our attention to the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of a sum of money and therefore, the receipt in question was not without consideration. Further reliance was placed on the decision of the Hon'ble Bombay High Court in the case of Keshub Mahindra and Others vs. CGT 70 ITR 1. This case related to applicability of provisions of section 4(a) of the Gift Tax Act 1958 which provide that any transfer for inadequate consideration could be treated as a gift to the extent to which the consideration is inadequate i.e. to the extent which the market value of the property on the date of transfer exceeds the value of consideration for the transfer. The Hon'ble Bombay High Court held as follows: "(ii)As the term "consideration" is not defined in the Gift-tax Act, it must be construed according to the definition of the term in section 2(d) of the Contract Act. Though the assessee must be distinguished from the company of which they were only the shareholders, directors or officers, yet there was nothing in the definition of "consideration" in section 2(d) of the Contract Act to show that when" the promise has done or abstained from doing or does or abstains from doing, or promises to do or to abstain from doing something", the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Mrs. Mani Cawasa Bamji but he received something less than what could be value of the half share in the said estate. According to him this shows that the assessee was not validly entitled to inherit the estate of late Mrs. Mani Cawasa Bamji. Accordingly to him the caveat field by the assessee had no sanctity. It was also submitted the settlements arrived at between the assessee and Mr. R.K.Bavasa was out of Court settlement and, therefore, those terms could not be accepted as genuine. 18. We have considered the rival submissions. In our view the contentions put forth on behalf of the assessee have to be accepted. Admittedly the assessee was the legal heir of the deceased late Mrs. Mani Cawasa Bamji being the son of a pre-deceased sister of the deceased. He together with Mr. Dinshaw Jamshedji Mistry , brother of the deceased were alone entitled to the estate of late Mrs. Mani Cawasa Bamji in the event of intestacy of late Mrs. Mani Cawasa Bamji. It was because of the fact that the assessee was entitled a half share in the asset of late Mrs. Mani Cawasa Bamji that a citation was issued to the assessee by Hon'ble Bombay High Court before granting the Probate in respect of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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