TMI Blog2018 (5) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... ift from the assessee, such an arrangement is as per the family settlement between the members. Therefore, the AO was erred in bringing the above two gift transactions within the purview of definition of transfer as defined under section 2(47) of the Income Tax Act, 1961. CIT(A) without appreciating the facts simply confirmed additions made by the AO. Direct the AO to delete additions made towards computation of long term capital gain for relinquishment of 50% share in property by way of gift. - Decided in favour of assessee. - ITA No.583/M/2018 - - - Dated:- 16-5-2018 - SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Assessee : Mrs. Renu Kapoor, A.R. For The Revenue : Mrs. N. Hemalatha, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings, the AO noticed that the assessee has gifted her 50% interest in flat No.52, Chanda Apartment, Colaba, Mumbai to her brother in law Shri Sanjay Kapoor vide gift deed dated 07.06.12. The AO further observed that during the year under consideration, the assessee has received gift from Shri Sanjay Kapoor of ₹ 68,50,000/-. In the light of the above facts, the AO asked the assessee to explain as to why relinquishment of right in property shall not be treated as transfer within the meaning of section 2(47) of the Act, in view of the fact that the assessee has received cash gift of ₹ 68,50,000/- in lieu of relinquishing her right in flat in favour of her brother in law. In response, the assessee vide her letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961. The Ld. CIT(A) after considering relevant submissions of the assessee dismissed appeal filed by the assessee by holding that the facts narrated by the AO clearly come within the ambit of provisions of section 2(47) of the Income Tax Act, 1961 and hence the AO was right in computing long term capital gain for relinquishment of 50% right in property in favour of her brother in law. The relevant portion of the order of Ld. CIT(A) is extracted below: 4. Decision: The facts of the case are the appellant Smt. JyotiR. Kapoor her brother in law Mr. Sanjay Kapoor carried out a joint business in the name of Jyoren Enterprises and both shared profits equally. In the year 1994 the family had purchased a Flat in Ajanta building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that divesting of her share therefore doesnot under any circumstances fall under the definition of sec. 2(47) of the IT Act. It was further submitted that it was a family settlement and following case laws were cited in support of that family settlement cannot be considered as a transfer u/s. 2(47). 1. Madras High court 299 ITR 348 Cit v Kay An enterprises and others (Annexure - 6) Karnataka High court 21 Taxmann.com 101 CIT vs R Nagaraja Rao (Aiinexure - 7) Smt. Vijaya Raje Scindia vs. ITO (ITA No. 2780(Bom/89) dated 17-12-1993. H. H. Moharani Manekuraje Pawan vs. ITO (15 ITD 545(Indore), Mohd. Haroon Japanwala vs. ITO (22 lTD 61) Delhi, DCIT, Spl. Rg. 46 vs. Sint. Vaishali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided to come to a settlement and family agreement was reached and a consent Decree was passed by the Bombay High Court in suit no. 4614 of 198 in 16th Oct. 2003. The royalty paid by the Court receiver was only on interim relief of their share of income from the property of GD Ambulkar which right arose on account of their preexisting right in the properties as per WILL of GD Ambulkar. Family agreement is a device by which dispute between family members as to their respected property were settled. Such settlement may involve division of property as between them and inconsequently a release of rights by one or the other in favour of the allottees. Conflicting legal claims get so settled . So it is very clear from the above High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the meaning of section 2(47) of the Income Tax Act, 1961 as the assessee has received a consideration of ₹ 68,50,000/- for relinquishing her right in the property. It is the contention of the assessee that she has gifted her share in the property for family settlement as per which the family has decided to buy a separate property for each member by internal arrangements, therefore, she has relinquished her 50% right in the family property in favour of her brother in law. Though she has received cash gift of ₹ 68,50,000/- in pursuance of relinquishing her right in property, the said transaction is purely a family arrangement between the family members for better peace and harmony. Therefore, the AO was incorrect in treating th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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