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TMI Blog2013 (1) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... inal outcome of the decision of the Hon'ble Apex Court? However, we find that the following question of law arises for consideration: "Whether the amount of compensation paid to the assessee to settle inequalities in partition, thus, a provision of owelty, represents immovable property and is not an income exigible to tax?" The said question of law arises out of the fact that during the course of assessment proceedings, the Assessing Officer found that the assessee (Group A) has received compensation from Group B at the time of partition of properties of group of M/s Hind Samachar Ltd. and that the said amount has been kept in Fixed Deposit Receipts as per the orders passed by the High Court as well as by the Hon'ble Supreme Court. The learned Assessing Officer considered the family settlement and found that 8.56% of Rs.24 crores of compensation is the share of the assessee (Ashwani Chopra) and consequently, levied long term capital gain on the said amount. There were two groups i.e. Group 'A', based at New Delhi and Group 'B', based at Jalandhar of share-holders of M/s Hind Samachar Ltd., a company founded by the veteran journalist late Lala Jagat Narian. Group 'A' is h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores was deposited with the Company Law Board. Now the dispute regarding date of split is pending before different forums including before the Hon'ble Supreme Court. It is so apparent from the order of the Assessing Officer, which reads as under: "12. As stated by the assesse's counsel in letter dated 13.11.2009, the order dated 04.11.2008 of Hon'ble Punjab & Haryana High Court has been challenged by Group B shareholders by way of SLP in Supreme Court of India. It is, thus, apparent that Group A, of which the assessee is a member, is not aggrieved with the amount of compensation of Rs.24 crores paid to it by Group B and the Group A has exercised the option of accepting Rs.24 crores before High Court. Further, a perusal of the Hon'ble Supreme Court's order shows that the Group B, vs. Shri Vijay Kumar Chopra & others have filed appeal against the order dated 04.11.2008 of the Punjab & Haryana High Court and the Hon'ble Supreme Court has ordered to list the case on the notified date and that till that date the order passed by the High Court shall not operate." The assessee filed an appeal against the said order. The learned Commissioner of Income Tax (Appeals) held that distribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that such payment in the partition settlement was an owelty for adjustment or equalization of shares and no more. The Court observed as under: "14. It must be remembered that the decree was one for partition of the properties belonging to the joint family of which the defendant No.3 and the appellant were coparceners. While effecting such a partition it would not be possible to divide the properties by metes and bounds there being of necessity an allocation of properties of unequal values amongst the members of the joint family. Properties of a larger value might go to one member and properties of a smaller value to another and therefore there would have to be an adjustment of the values by providing for the payment by the former to the latter by way of equalization of their shares. ....." It has been held that when an owelty is awarded to a member of a joint family on partition for equalization of the shares on an excessive allotment of immovable properties to another member of the joint family, such a provision of owelty ordinarily creates a lien or a charge on the land taken under the partition. The member to whom excessive allotment of property has been made on such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from one co-sharer and given to another on partition; it is as if a portion of the property that really belonged to B has been assigned to A and A is made to pay the price therefore to B. B is therefore entitled to a vendor's share for the price remaining unpaid. xxx xxx xxx 7. ....As we have found owelty to be the price of land taken from one co-sharer & allotted to another on a partition, and that the charge for owelty is in substance, a vendor's charge for unpaid price, it is within the exception (vii) in the above definition and is, therefore, outside the purview of the Kerala Agriculturists Debt Relief Act, 1958." In the concurring, but separate judgment by Hon'ble Mr. Justice Baghavan, J. it was mentioned that owelty is only part of the properties partitioned though it may not be part of the original properties. It was held to the following effect: "16. ...Putting the idea again differently, the share of the member with the excessive allotment is that excessive allotment less the owelty carved out of it and the share of the other member is the lesser allotment added with the owelty carved out of the excessive allotment. This again means that owelty is only part of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. ............." The Madras High Court in AL. Ramanathan's case (supra) returned a finding that an amount of Rs.8 lacs received in a family settlement to settle the disputes between the family is not subject to capital gain. It was observed as under: "2. A perusal of the records goes to establish that dispute arose in that family and the family arrangement was arrived at in consultation with the panchayatdars and accordingly realignment of interest in several properties had resulted. The family arrangement was arrived at in order to avoid continuous friction and to maintain peace among the family members. The family arrangement is an agreement between the members of the same family intended be generally and reasonably for the benefit off the family either by compromising doubtful or disputed rights or by preserving the family property or the peace and security off the family by avoiding litigation or by saving its honour. So, the family arrangements are governed by principles which are not applicable to dealings between strangers and the family arrangement among them is for the interest of the family, for the harmonious way of living. So, such realignment of interest by way ..... X X X X Extracts X X X X X X X X Extracts X X X X
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