TMI Blog2021 (5) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... yd/2019 - - - Dated:- 28-5-2021 - Smt. P. Madhavi Devi, Judicial Member For the Assessee : Sri Vishal Gupta Vakkalagadda For the Revenue : Sri Sandeep Mehta,DR ORDER This is assessee s appeal for the A.Y 2010-11 against the order of the CIT (A)-6, Hyderabad, dated 14.10.2019. 2. Brief facts of the case are that the Assessing Officer having jurisdiction over the assessee had received information that the assessee individual has sold property vide document No.457/2009 for a consideration of ₹ 32,21,000/- during the financial year relevant to A.Y 2010-11; whereas the fair market value of the property as per Stamp Valuation Authority was ₹ 43,80,000/-. Since the assessee had not filed his return of income, the Assessing Officer believed that income chargeable to tax has escaped assessment. Thus, the Assessing Officer issued notice u/s 148 of the Act on 24.03.2017. 3. During the course of re-assessment proceedings, the assessee filed computation of capital gains projecting loss on sale of the property. The documents pertaining to the property were called for from the assessee and also from the Land Registration Authorities u/s 133(6) of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o cost of the building thereon while computing the capital gain. The CIT (A) granted partial relief to the assessee by holding that the gain from the sale of property is LTCG and not STCG. He also observed that the fair market value of the property as on 1.4.1981 has to be considered at ₹ 100/- per sq. yard and not the indexed cost of acquisition and further that the said cost has to be allowed along with cost of improvement which was already allowed by the Assessing Officer. 5. As regards the status of the assessee in which the capital gain has to be taxed and also the SRO value as on the date of sale of the property or agreement of sale is concerned, the CIT (A) held against the assessee and the assessee is in second appeal before the Tribunal by raising the following grounds of appeal: 1. On the facts and in the circumstances of the case, the order of the learned CIT (A) is erroneous and bad in law to the extent prejudicial to the assessee. 2. On the facts and in law, the learned CIT (A) grossly erred in upholding the action of the Assessing Officer in assessing the capital gains on sale of property in individual status of the assessee, when the property was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired property from his father in 1955 i.e. even prior to the promulgation of the Hindu Succession Act in 1956. He submitted that since the assessee was a male Hindu and had inherited the property prior to coming into force of Hindu Succession Act 1956, automatically he became a member of HUF and accordingly the property of the assessee has become HUF property and it continued to be so till it was transferred by way of agreement of sale and thereafter execution of sale deed dated 8.4.2009. Therefore, according to him, the income should have been assessed in the hands of HUF and not in the hands of the assessee individual. 7. The learned DR, on the other hand, supported the orders of the authorities below who have discussed the issue elaborately. 8. Having regard to the rival contentions and the material on record, I find that the assessee s father had received this property in 1950 by virtue of family settlement deed and after assessee s father s demise in 1955, the property was inherited by the assessee. The position of the existence and devolvement of ancestral properties on the HUF before and after the promulgation of Hindu Succession Act in 1956 has been considered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages 577 to 578 of the report, this Court dealt with the effect of Section 6 of the Hindu Succession Act, 1956 and the commentary made by Mulla, 15th Edn. pages 924-926 as well as Mayne's on Hindu Law 12th Edition pages 918-919. Shri Banerji relied on the said observations of Mayne on 'Hindu Law', 12th Edn. at pages 918-919. This Court observed in the aforesaid decision that the views expressed by the Allahabad High Court, the Madras High Court the Madhya Pradesh High Court and the Andhra Pradesh High Court appeared to be correct and was unable to accept the views of the Gujarat High Court. To the similar effect is the observation of learned author of Mayne's Hindu Law, 12th Edn. page 919. In that view of the matter, it would be difficult to hold that property which developed on a Hindu under Section 8 of the Hindu Succession Act, 1956 would be HUF in his hand vis-a-vis his own sons. If that be the position then the property which developed upon the father of the respondent in the instant case on the demise of his grandfather could not be said to be HUF property. If that is so, then the appellate authority was right in holding that the respondent was a licensee of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erties/properties, a plaintiff has to establish to the satisfaction of the court that when (i.e date and year) was a particular property or properties thrown in common hotchpotch and hence HUF/Joint Hindu Family created. (ii) This position of law alongwith facts as to how the properties are HUF properties was required to be stated as a positive statement in the plaint of the present case, but it is seen that except uttering a mantra of the properties inherited by defendant no.1 being ancestral‟ properties and thus the existence of HUF, there is no statement or a single averment in the plaint as to when was this HUF which is stated to own the HUF properties came into existence or was created ie whether it existed even before 1956 or it was created for the first time after 1956 by throwing the property/properties into a common hotchpotch. This aspect and related aspects in detail I am discussing hereinafter. 8(i). A reference to the plaint shows that firstly it is stated that Sh. Tek Chand who is the father of the defendant no.1 (and grandfather of Sh. Harvinder Sejwal and defendants no.2 to 4) inherited various ancestral properties which became the basis of the Joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selfacquired in the hands of Sh. Gugan Singh in view of the ratio of the Supreme Court in the case of Yudhister (supra) inasmuch as there is no case of the plaintiffs of HUF existing before 1956 or having been created after 1956 by throwing of property/properties into common hotchpotch either by Sh. Tek Chand or by Sh. Gugan Singh/defendant no.1. There is not even a whisper in the pleadings of the plaintiffs, as also in the affidavit by way of evidence filed in support of their case of PW1 Smt. Poonam, as to the specific date/period/month/year of creation of an HUF by Sh. Tek Chand or Sh. Gugan Singh after 1956 throwing properties into common hotchpotch. (iii) The position of HUF otherwise existing could only be if it was proved on record that in the lifetime of Sh. Tek Chand a Hindu Undivided Family before 1956 existed and this HUF owned properties include the property bearing no.93, Village Adhichini, Hauz Khas. However, a reference to the affidavit by way of evidence filed by PW1 does not show any averments made as to any HUF existing of Sh. Tek Chand, whether the same be pre 1956 or after 1956. Only a self-serving statement has been made of properties of Sh. Gugan Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who admittedly inherited the property on the death of late Sh. Tara Chand Chopra as a sole legal heir of late Sh. Tara Chand Chopra and thus as a self-acquired property of Sh. Vasudev Chopra. 6. The judgment in the case of Sunny (Minor) Ors has been referred and followed by me in the later case of Sh. Surender Kumar Vs. Sh. Dhani Ram and Others, 227 (2016) DLT 217. The relevant paras of this judgment are paras 4, 5, 7 and 9 and which read as under:- 4. Plaintiff claims that as a son of defendant no.1 and as a grandson of late Sh. Jage Ram, plaintiff is entitled to his share as a coparcener in the aforesaid suit properties on the ground that the properties when they were inherited by late Sh. Jage Ram were joint family properties, and therefore, status as such of these properties as HUF properties have continued thereby entitling the plaintiff his rights in the same as a coparcener. 5. The Supreme Court around 30 years back in the judgment in the case of Commissioner of Wealth Tax, Kanpur and Others Vs. Chander Sen and Others, (1986) 3 SCC 567, held that after passing of the Hindu Succession Act, 1956 the traditional view that on inheritance of an immovable property f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly stated. Thus, if an HUF property exists because of its such creation by throwing of self- acquired property by a person in the common hotchpotch, consequently there is entitlement in coparceners etc to a share in such HUF property. (iii) An HUF can also exist if paternal ancestral properties are inherited prior to 1956, and such status of parties qua the properties has continued after 1956 with respect to properties inherited prior to 1956 from paternal ancestors. Once that status and position continues even after 1956; of the HUF and of its properties existing; a coparcener etc will have a right to seek partition of the properties. (iv) Even before 1956, an HUF can come into existence even without inheritance of ancestral property from paternal ancestors, as HUF could have been created prior to 1956 by throwing of individual property into a common hotchpotch. If such an HUF continues even after 1956, then in such a case a coparcener etc of an HUF was entitled to partition of the HUF property. 9. I would like to further note that it is not enough to aver a mantra, so to say, in the plaint simply that a joint Hindu family or HUF exists. Detailed facts as required ..... 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