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2016 (1) TMI 903 - ITAT CHENNAI

2016 (1) TMI 903 - ITAT CHENNAI - TMI - Entitlement for deduction u/s 54 - gift of the property so purchased to daughter - whether gift does not attract long term capital gain tax? - difference between gift and settlement u/sec. 47(i)(iii) - Held that:- The assessee being a father has settled the property in favour of his daughter out of love and affection without any consideration as referred at para 3 of settlement deed.

As far as the settlement is concerned the assessee as a donor .....

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capital gains set-off with the cost of acquisition of new asset purchased in the same year but the issue arise whether the settlement or gift of such property claimed as exemption will call for addition on transfer within three years. After considering the elaborate submissions, judicial decisions followed, the assessee after availing exemption settled the property in favour of the daughter duly following the process of law. However, we make it clear that during the restriction period, the daug .....

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DICIAL MEMBER For The Appellant : Shri. P. Radhakrishnan, IRS, JCIT. For The Respondent : Shri. V.S. Jayakumar, Advocate ORDER PER G. PAVAN KUMAR, JUDICIAL MEMBER: The appeal is filed by the Revenue against order of CIT (A)- 19, Chennai in ITA No. 86/CIT(A)10/2013-14, Dated 31.03.2015 for the assessment year 2011-12 passed u/s. 143(3) and 250 of the Income Tax Act, 1961. 2. The Revenue has raised the followings grounds of appeals:- 2.1.The Id CIT(A) erred in holding that the assessee is entitled .....

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is not much distinct from giving the sale proceeds to his daughter and .she making the investment in her name, in which case the benefit of reinvestment is lost without any dispute. 2.4. The Id CIT(A) ought to have appreciated that the assessee seems to manipulate the provisions of the section by misinterpreting the same. 2.5. The Id CIT(A) ought to have applied the ratio of the decision of the H'ble Bombay High court in the case of Prakash v ITO (2008) (173 Taxman 311) wherein it was held t .....

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come of <7,04,414/-. Subsequently the case was selected for scrutiny under CASS and notices u/s.143(2) and 142(1) were issued. In response to the notice, the assessee s authorized representative appeared from time to time and submitted information. The assessee has offered income from House Property, income from Business and also income from Long Term Capital Gains on sale of property and claimed exemption u/sec 54 of the Act. During the hearing proceedings, the Assessing Officer considered c .....

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strar office the assessee has settled the same residential property in favour of his daughter vide registered settlement deed No.1225 dated 1st November, 2010. It was submitted in compliance to show cause notice that the Capital gains shall arise only when the settle i.e. daughter of the assessee sells the property within a period of three years. Contra to the submissions, the Assessing Officer gave findings that the settlement does not cover u/s.54(i) or 54(ii) of the Act. Further, the ld. Auth .....

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appellate proceedings, the assessee has submitted documentary evidences, also gave a detailed explanations and filed written submissions at para 2 of page 4 of CIT order are as under:- "The appellant is an individual being assessed to Income Tax, by Business ward VI(l), Chennai. The appellant was owninq a property at 33, Srinivasa Perumal Sannathi II Street, Royapettah, Chennai - 600 014. This property was sold in April 2010 and the Proceeds were invested in August 2010 in another property .....

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hall be allowed. If the new property is transferred within three years of acquisition, the gain chargeable shall be worked out by taking cost as NIL in the year of sale of new property. The assessing officer was not right in rejecting the claim made under Section 54. Without prejudice to the above submission. The Property which was acquired new was settled in favour of his daughter by means of settlement deed, out of love and affection. This should not be treated as Transfer. The assessing offic .....

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ration of one person called donor to another the donee and accepted by done. It is clear that settlement and gift are the same and the "said transaction was not covered under "Transfer", and the appellant is entitled for deduction u/s.54 The ld. Commissioner of Income Tax (Appeals) after considering the evidences, written submissions and also findings of the Assessing Officer relied on the settlement deed executed in favour of Daughter out of love and affection which take the char .....

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fficer to delete the addition and allowed the appeal. Aggrieved by the order of the Commissioner of Income Tax (Appeals) the Revenue filed an appeal before the Tribunal. 5. The ld. Departmental Representative has clarified that the issue of settlement deed and the purchase of property failing in the same assessment year and therefore the provisions are controvert by the assessee and exemption be denied and relied on the Bombay High Court decision in the case of Prakash vs. ITO (2008) 173 Taxman .....

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of the Act. The contention of the ld. Authorised Representative is that though the settlement deed is made without any monetary consideration and purely out of love and affection qualifies for exemption as gift. There is no dispute about the compliance of Sec. 54 except the Assessing Officer treated the settlement deed as transfer within the period of three years and raised various issues interpreting the terminology of gift. The ld. Authorised Representative submitted that the gift definition .....

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y of settlement deed fall within the definition of gift and there is no difference between gift and settlement u/sec. 47(i)(iii) relied on judicial decisions and the order of the Commissioner of Income Tax (Appeals) and prayed for dismissal of the Revenue appeal. 7. We have heard the rival submissions of both the parties, perused the material on record and orders of the lower authorities and judicial decisions cited. The assessee being a father has settled the property in favour of his daughter .....

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