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TMI Blog2015 (10) TMI 2120X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to tax. 2.1. On the other hand, Shri Vimal Punamiya, ld. counsel for the assessee, defended the conclusion arrived at in the impugned order by submitting that it is a family settlement as there was a division of property among the family members and the amount was received by way of family settlement as there was different valuation of different properties, thus, the impugned amount is not liable to tax as there was no income to the assessee. 2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee, an individual, is in the business of building/developing and also hotel business. The assessee was also Director of M/s Sea Princess Hotels and Properties Pvt. Ltd., declared total income of Rs. 86,994/- in his return filed on 31st October, 2007. The case of the assessee was selected for scrutiny under CASS, consequently, notice u/s 143(2) of the Income Tax Act, 1961(hereinafter the Act) was issued and served up on the assessee. The assessee attended assessment proceedings and furnished the details. The assessee, during the year, received a sum of Rs. 33 crores from a close relative/family member name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement and the amount was received as a gift/family settlement, therefore, it is exempt u/s 56(2)(v) of the Act. The ld. Assessing Officer held that it was merely a colourable device and finally added the impugned amount to the income of the assessee. 2.3. On appeal, before the ld. Commissioner of Income tax (Appeals), the facts were examined, finally it was concluded that the source of the impugned receipt has been duly explained and on the reasoning contained in the impugned order decided in favour of the assessee. The relevant portion from the concluding para is reproduced hereunder for ready reference:- "5. I have considered the facts of the issue and the submissions made by the AR. There is no merit in the submission of the AR that the impugned gift given by Mrs.Neeta Ashok Gundecha to the appellant was a genuine gift. A gift is given out of natural love and affection without any consideration. In the present case, the family settlement has taken place which could he to aver t ei ther existing or potential issues relating to distribution of property/ assets. Obviously, in these circumstances, there could be no natural love and affection. Besides, it is noted that the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to tax and only the exemption has been withdrawn by the omission of the said section. However , the source of the impugned receipt has been duly explained by the appellant. The source of this receipt also stands admitted during examination before the AO by the person who made the said payment. The principles discussed in the various judicial pronouncements quoted by the AO are riot applicable to the facts of the case on hand. Also, the AO has not brought any material on record as LO how the said amount qualifies to be held as "income" which was actually stated to be a gift but held t3 be a part of the family settlement receipt. Thus, even following the Assessing Officer's finding that the gift was a device to compensate the donee's family for the stated understatement of the value of the shares of Sea Princes Hotel, still there is no tax avoidance since the understated price of shares in the family no tax avoidance since the understated price of shares in the family arrangement is not taxable as held in a number of court judgments quoted by the AR. Hence, it is held that no addition on account of casual income could have been made by the AO in the circumstances of the case. The g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the claim of exemption u/s 56(2)(v) of the Act, under the facts available on record, can be denied to the assessee. We note that one of the reason for denying the relief to the assessee by the Assessing Officer is that the written agreement was not produced by the assessee, whereas, the Hon'ble Apex Court in Take Bahadur Bhujil vs Devi Singh Bhujil (AIR) 1966 (SC) 292 held that family arrangement can be arrived at orally. Identical ratio was laid down in Sahu Madho Das vs Mukund Ram AIR 1955 (SC) 481 and Kale vs Dy. Director of Consolidation AIR 1976 (SC) 807 and Ziauddin Ahmad vs CGT (1976) 102 ITR 253 (Gau.). Even otherwise, no new property came in to existence or to the assessee because the assessee was already having a right/share in the undivided property. Due to family settlement/arrangement, the individual persons became full owners of the property of their respective share and they relinquished their part of the share which went to another family members. Even capital gains is attracted when there is a transfer of property. Under the present fact, it is not a transfer of property rather is a family settlement through which their individual shares were determined out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere will be natural love and affection. Even otherwise, while distributing the property, the market value is determined on the basis of market valuation and other considerations and it is always not possible to divide the property in equal parts and it can be compensated by way of making the payment or by giving the another property to the other family members. The property cannot be physically weighed on the scale and is to be valued only for settling the matter. 2.7. Another contention raised by the ld. CIT-DR and also mentioned in para 6.2 of the assessment order that shares of M/s. Sea Princess Hotel and Properties ltd. were transferred lower than the book value and the impugned gift was not genuine is also not substantiated and also not borne out of facts, because unless and until the family members agree by way of family settlement, it cannot go through because there may be possibility of compensating the value in either terms of money or by providing equivalent share in another property but fact remains that the source of the impugned receipt has been duly explained. The family is consisting of businessmen/businesswomen and all the members are aware about the market value o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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