CIT vs. SMT RAJ RAJPAL

IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 29/2012 . . . CIT ..... Appellant . Through Mr. Abhishek Maratha, sr. standing counsel with Ms. Anshul Sharma, Adv. . versus . . . SMT RAJ RAJPAL ..... Respondent . Through . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 18.01.2012 . . . 1. The present appeal by the Revenue under section 260A of the Income Tax Act, 1961, (for short, ?the Act?) impugns the order dated 10th June, 2011 passed by the Income Tax Appellate Tribunal (for short, ?the tribunal?) in the case of Dy. CIT vs. Smt. Raj Rajpal in ITA no. 1585/Del/2011. It pertains to Assessment Year 2007-08. . 2. The respondent-assessee is the widow of Late Ishwar Chand Rajpal, who expired on 10.10.1989. Late Ishwar Chand Rajpal was the owner and had acquired property No.17, Road No.51, Punjabi Bagh (West), New Delhi, in 1964. . 3. The property was sold by the respondent-assessee on 12th July, 2006 for Rs.2 crores. The respondent-assessee claimed exemption under Section 54 and 54EC of the Act of Rs.37,10,000/- and Rs.50,000,00/-. The respondent-assessee treated the sale as long term capital gain. . 4. The Assessing Officer held that the other legal heirs of Late Ishwar Chand Rajpal had executed a relinquishment deed in favour of the respondent-assessee on 15th April, 2006 and the property was sold on 12th July, 2006. Therefore, the respondent-assessee did not hold the property for 36 months. He accordingly, treated the sale as short term capital gains and held that the respondent-assessee was not entitled to benefit of Section 54 and 54EC of the Act. . 5. The CIT (Appeals) and the tribunal did not agree with the Assessing Officer. . 6. Late Ishwar Chand Rajpal had left behind a Will dated 14.9.1989 as . per which the property was to devolve on the respondent, who was to have life interest in the same and after her death, the property was to be inherited by one son, to the exclusion of the other son and daughter. However, there was a family settlement. A Memorandum of Family Settlement dated 28th November, 2003 was recorded. . 7. The Assessing Officer has referred to the Memorandum of Family Settlement and held that it was not registered and therefore cannot be considered. A memorandum of family settlement which records an earlier oral settlement does not require registration. There is no contrary allegation and a copy of the memorandum has not been filed. The property was mutated in the name of the respondent-assessee in 1992, after no objection from all other legal heirs. The respondent-assessee before the CIT (Appeals) had produced the codicil dated 1st October, 1989, which was taken on record, after following the procedure prescribed and on satisfying conditions prescribed under Rule 46A of the Income Tax Rules, 1962. As per the said codicil the respondent-assessee was the owner of the property after death of Late Ishwar Chand Rajpal. The witness to the codicil Ziaul Hussain also confirmed the execution of the same. . 8. Learned counsel for the Revenue emphasized that the codicil was not produced and relied upon before the Assessing Officer, therefore, it has been fudged and the CIT (Appeals) should not have admitted the said document. It is stated that in these circumstances, orders of the CIT (Appeals) and the tribunal are perverse. It is not possible to agree with this contention. The CIT (Appeals) has recorded detailed reasons why admission of additional evidence i.e. the codicil was justified. The son, who was entitled to inherit the property after death of the respondent-assessee under the Will dated 14th September, 1989, has accepted and admitted the codicil dated 1st October, 1989. Secondly, there can be several reasons why family members enter into an oral settlement in respect of inherited assets. Peace and harmony in the family is an important and relevant circumstance. Memorandum of family settlement dated 28th November, 2003 was executed amongst the legal heirs. Further after the death of Ishwar Chand Rajpal in 1989, the property was mutated in favour of the respondent-assessee in 1992 to the exclusion of other legal heirs with the consent of all. These facts clearly support and affirm the stand accepted by the CIT (Appeals) and the tribunal. Their orders cannot be regarded as perverse. With regard to the relinquishment deed executed on 15th April, 2006 by the other legal heirs of Ishwar Chand Rajpal in favour of the respondent-assessee, the CIT (Appeals) and tribunal have accepted and held that the relinquishment deed was executed to ensure that there was no impediment in sale of the property or doubt about the title and the buyer felt secured and sure that the title of the respondent-assessee was perfect, clean and unblemished. It helped the respondent-assessee to get/secure the best value or sale consideration. Lastly, the relinquishment deed in favour of the respondent-assessee was without consideration. This amount to a gift. The Assessing Officer had ignored provisions of Section 49 (1)(ii), which apply to gift. Thus the transfer was rightly treated as a long term capital gain. . 9. In view of the aforesaid position, we do not think that any . substantial question of law arises out of the order of the tribunal. The appeal has been filed in routine without analysis and consideration required. Accordingly, the appeal is dismissed with costs of Rs.10,000/- , which will be paid to the Prime Minister?s Relief Fund within a period of four weeks from today. It will be the responsibility of the appellant to ensure that the aforesaid amount is paid. . SANJIV KHANNA, J . . . . . . . R.V.EASWAR, J . JANUARY 18, 2012 . vld . . . 24 to 26, 32, 33 and 36 . $ .