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Shrimati Roma Sengupta Versus Commissioner of Income Tax – I Kolkata & Another

2016 (3) TMI 600 - CALCUTTA HIGH COURT

Taxability of income - Whether 50% of the sale consideration received by the assessee with respect to the matrimonial house situated at 25, Mandeville Gardens, Calcutta was taxable in the hands of the assessee despite the fact that the Tribunal arrived at a finding that the said amount was paid on account of alimony? - Held that:- The amount received by the assessee was a capital receipt and hence not taxable. - Decided in favour of assessee - ITA No. 214 of 2004 - Dated:- 11-3-2016 - Girish Cha .....

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assessment year 1997-98. By an order dated 25th November, 2004 the appeal was admitted on the following substantial questions of law:- I) When the learned Members of the Tribunal themselves recorded that they refrain from commenting on the direction of the learned CIT (Appeals) on the issue of admissibility of deduction under Section 54 of the I. T. Act which the Revenue has not agitated before the Tribunal was justified in allowing the appeal on the issues raised by the Revenue and in reversing .....

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% of the property in question in favour of the assessee by way of alimony and as such Section 49(1)(iii) of the I.T. Act will be applicable and whether the Tribunal was justified in holding that 50% of the cost of acquisition of capital gains in the hands of the assessee and whether the said findings of the Tribunal are perverse? III) Whether the Tribunal is justified in upholding the disallowance made by the Assessing Officer of claim of the assessee for ₹ 50,000/- as brokerage for comput .....

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stion in controversy between the parties. IV) Whether 50% of the sale consideration received by the assessee with respect to the matrimonial house situated at 25, Mandeville Gardens, Calcutta was taxable in the hands of the assessee despite the fact that the Tribunal arrived at a finding that the said amount was paid on account of alimony? Briefly stated the facts and circumstances of the instant case are as follows:- Shrimati Roma Sengupta the assessee herein married Mr D Chowdhury in the year .....

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u/s 54 of the Act with respect to the aforesaid long-term capital gain. The assessee further claimed deduction of brokerage amounting to ₹ 50,000/- from the amount of capital gain. The return was processed u/s 143(1) later on the assessee received a notice u/s 148 alleging that income had escaped assessment. In the course of the reassessment proceedings the assessee was asked to furnish inter alia evidence against the cost of acquisition of the matrimonial house. The assessee contended tha .....

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ille Gardens and the assessee was his nominee. The assessing officer also observed that since the flat at 9, Mandeville Gardens was owned exclusively by the former husband of the assessee and the sale proceeds from the said property were utilized to purchase the matrimonial house at 25, Mandeville Gardens, therefore the former husband of the assessee was the full owner of the newly purchased matrimonial house. The assessing officer on the aforesaid basis held as follows:- …In the circumst .....

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ed to as the CIT(A) ) against the order of the assessing officer. The CIT(A) by his order dated 14th February, 2002 allowed the appeal of the assessee and held as follows:- He has further disallowed the claim of brokerage paid to 4 different parties totaling ₹ 50,000/- on the ground that his Inspector could not find these persons. In his written submission dt. 14.2.2002 Sri A. Sinha who attended on behalf of the appellant has stated that the A.O. has taken the cost of acquisition of the sa .....

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ous parties for disposal of house property merely relying on the Inspector's report that he could not find the said parties. The appellant was not given any opportunity to rebut the Inspector s report. It was also ignored by the A.O. that the amount was paid through account a cheque and lastly the A.O. had not allowed deduction claimed by the appellant u/s. 54 of the I.T. after correctly computing the cost incurred by the appellant to purchase new property on 11.6.96. The A.O. has given no r .....

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before the Tribunal. The Tribunal by an order dated 9th December 2003 reversed the order of the CIT(A) and held as follows:- In the case before us the divorce resulted in mutual agreement of a decree and the marriage between the husband and wife was dissolved by decree of dated 12.1.94. Nowhere in this decree could the property be said to have been acquired by the assessee as a co-owner and neither have the intentions of the erstwhile husband wife team had ever suggested the same. The facts as .....

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ontributed. The word devolution has to be understood in the manner it was for the purpose of changing hands from one owner to another even inter vivos without disturbing the status of the entity which becomes owner thereof without having to undergo corresponding devolution. In other words, the assessee in this case having parted from her husband was afforded 50% of the consideration which in fact could not be termed as asset entitled to capital gains. The learned CIT(A) proceeded to consider the .....

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by disposing of another property by the husband when the wife remained a legal nominee totally excluding her from the ownership thereof…. The Tribunal thus rejected the contention of the assessee as regards capital gains on the basis that 50% of the sale proceeds were received by the assessee on account of alimony from her former husband. Mr. J. P. Khaitan, learned senior advocate appearing for the assessee contended that the lump sum alimony is a capital receipt and therefore not taxable .....

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the lump sum alimony was in the nature of capital receipt. To be precise the Court held as follows:- In our view, from the point of view of taxability, the decree must be regarded as a transaction in which the right of the assessee to get maintenance from her ex-husband was recognized and given effect to. That right was undoubtedly a capital asset. By the decree that right has been diminished or partly extinguished by the payment of the lump sum of ₹ 25,000 and balance of that right has be .....

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g right in the assessee to obtain any monthly payment at all. Nor is there anything in the decree to indicate that ₹ 25,000 were paid in commutation of any right to any periodic payment. In these circumstances, in our view, the receipt of that amount must be looked upon as a capital receipt. In view of this, we do not think it necessary to consider whether the said receipt could be regarded as casual receipt or in the nature of a windfall. Ms. Asha Ghutghutia learned counsel appearing on b .....

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e with this contention either. It was open to the assessee to contend that the receipt was capital in nature and therefore not taxable. She must have been advised to claim benefit on the basis of capital gains. When the alternative case, which the assessee could have made, has not only been found against her but has also been put forward as an answer to her claim, it is not improper to grant her the benefit on that basis. The revenue cannot also in that case be heard to contend that it has been .....

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t only admitted by the defendant in his written statement but was expressly put forward as an answer to the claim which the plaintiff made in the suit, there would be nothing improper in giving the plaintiff a decree upon the case which the defendant himself makes. A demand of the plaintiff based on the defendant's own plea cannot possibly be regarded with surprise by the latter and no question of adducing evidence on these facts would arise when they were expressly admitted by the defendant .....

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given effect to by both the lower courts as well as by the Privy Council. But the Privy Council held that it was open in such circumstances to the plaintiff to repudiate the transaction altogether and claim a relief outside it in the form of restitution under Section 65 of the Indian Contract Act. Although no such alternative claim was made in the plaint, the Privy Council allowed it to be advanced and gave a decree on the ground that the respondent could not be prejudiced by such a claim at all .....

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