TMI Blog2015 (7) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28th April, 2008 wherein, it was agreed that the assessee shall ceased to have any rights, title, interest, claims in any of the properties of late Shri R. L. Maheshwari i.e. her father-in-law. Under a family arrangement, if a settlement is agreed, amongst the members then it cannot be held that it’s a case of transfer of a capital asset. The assessee had merely inherited the share on behalf of her late husband from the property belonging to her father-in-law. This share had been relinquished under the family arrangement, wherein all the parties who had antecedents’ rights have mutually agreed upon for settlement of the shares. Such a family settlement or arrangement does not tantamount to any transfer of a title, albeit it is akin to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been filed by the assessee against impugned order dated 31.08.2012 passed by CIT(A)- 25, Mumbai for the quantum of assessment passed u/s 143(3) for the assessment year 2009-10 on the following ground: 1. On the facts and in the circumstances of the case, the learned Commissioner of Income tax (Appeals) erred in holding that a sum of ₹ 35,00,000/- received by way of family settlement is liable to be taxed as long term capital gain subject to deduction of indexed cost. The appellant submits that the relinquishment of property by way of family arrangement would not attract capital gain tax as the same was a prudent arrangement to avoid possible litigation among the family members. The appellant therefore submit that the entire a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received for relinquishing of rights in the property is taxable under the head long-term-capital-gain u/s 45. The assessee had also raised alternate contention that if the said property is taxed under the head capital-gain then fair market rate as on 01.04.1981 should be taken and cost of acquisition should be allowed after indexation as provided in section 48. The Ld. CIT(A) after considering the Valuation report of the assessee and also the remand report of the AO, directed the AO to take a fair market value as on 01.04.1981 as per the valuation report submitted by the assessee and give indexation benefit to the assessee in view of the decision of Hon ble Bombay High Court in the case of CIT v Manjula J Shah, reported in 16 taxman.co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 ACIT v Singla Rice Gen. Mills (2002) 82 ITD 778(ITAT Del A Bench) 6. On the other hand, Ld. DR strongly relied upon the order of the CIT(A). 7. We have heard the rival contention and perused the relevant material on record. The assessee inherited 1/3rd property in the estate of her deceased husband s father (i.e. her father-in-law) after the death of her minor son. A family arrangement was arrived to partition the interest of the assessee by paying her lump sum amount of ₹ 35,00,000/- to relinquish the right in the properties. A family settlement agreement was arrived at on 28th April, 2008 wherein, it was agreed that the assessee shall ceased to have any right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the shares. Such a family settlement or arrangement does not tantamount to any transfer of a title, albeit it is akin to a partition of the family asset amongst the members, which is not regarded as a transfer u/s 47(i). In case of a family settlement, it only settles the conflicting claims which had pre-existing joint interest, to a separate interest and there is no conveyance of a property or transfer of a property. Here it is not a transfer of a capital asset but an arrangement for settling the interest and rights of the family members. The Hon ble Madras High Court in the case of CIT vs Kay Arr Enterprises Others, reported in [2008] 299 ITR 348, held that when the parties entered into a family arrangement, that would not attra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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