S.KUMARI,CHENNAI vs. ITO NON CORPORATE WARD 15(2), CHENNAI

आदेश / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER:

Smt.S.Kumari filed her returns, inter alia, claiming that the amount received was the family compensation for relinquishment of her family tenancy rights and for vacating her family from the said premise where she and her family resided about 50 years and therefore, the amount received was towards members extinguishment of tenancy rights of the property, in which, her share was 1/4th and accordingly arrived the long term capital gains. Since she has invested in a residential property, she claimed exemption u/s.54F.

With regard to 3/4th share of income of other family members, during the assessment proceedings of assessment years 2010-11 & 2011-12, the assessee furnished a copy of return of Mr.C.Sundar Kumar, wherein, he has admitted long term capital gains of his share and also the PAN particulars of Ms.K.Nisha & Mr.Selvakumar. The AO from the Sale Deed and from the information obtained u/s.133(6) found that M/s.Pee & Dee Land Holdings Pvt. Ltd., on behalf of the sellers, Mr.M.K. Durairaj Naicker and 63 others (the legal heirs of Dr.M.T.Kuppusamy Naicker) of the impugned property, paid Rs.1.30 Crs. on various dates during these assessment years and M/s.Pee & Dee Land Holdings Pvt. Ltd., confirmed that nature of amount paid to Smt.S.Kumari was towards relinquishment of tenancy rights. The AO held that since the sale deed mentions that the buyer of the property paid Rs.1.30 Crs. to Smt.S.Kumari only towards settlement on behalf of the vendors to secure the possession of the impugned property and nothing is stated about the compensation to the entire family of Smt.S.Kasturi, she neither owned the property sold nor placed any evidence towards five decade tenancy and hence assessed the entire receipt as assessee’s income & 2420/Chny/2018 :- 3 -: under the ‘other sources’ and taxed in the respective assessment years.

Aggrieved, the assessee filed appeals before the Commissioner of Income Tax(A) and the Ld.CIT(A) dismissed them. Aggrieved against those orders, the assessee filed these appeals with this Tribunal.

Smt.S.Kumari’s father lived in the premises for more than 40 years. After his death, Smt.S.Kumari, her husband and her children lived therein, apart from earning certain parking fee. Thus, it is clear that Mrs.S.Kumari and her family members had certain rights in the impugned property and in order to ensure that the buyer has an absolute enjoyment of the property relinquishment of the assessee and her family member’s rights are absolutely required and hence on behalf of the sellers, the purchaser paid the money, which is not in dispute. Therefore, the assessee and her family member’s rights in the property certainly falling under the definition of capital asset within the scope of Sec.2(14) r.w.s.2(47). The Ld.AR invited & 2420/Chny/2018 :- 4 -: our attention to the Paper Book, wherein, the details of admission of income under the head ‘capital gains’ in the name of assessee’s family members viz., Mr.C. Sundar Kumar, Mr.Selvakumar and Ms.K.Nisha, etc., were placed and submitted that the assessee’s family members have admitted the gains arising out of capital gains in their respective returns. In the case of Ms.K.Nisha, the AO examined the transaction u/s.143(3) r.w.s.147 dated 27.12.2016 and accepted her LTCG and allowed the corresponding deduction u/s.54F also. Therefore, the Ld.AR submitted that the AO as well as the Appellate Authority erred in deciding the assessee’s cases and hence pleaded to allow the assessee’s appeal. Per contra, the Ld.DR supported the orders of the lower authorities.

as the purchaser have mentioned that they have paid an amount of Rs.1.30 Crs. Thus, both the sellers and the purchaser has recognized the rights of the assessee and paid due consideration for an absolute enjoyment of that property. Further, the purchaser has also certified before the AO that the amount paid to Mrs.S.Kumari towards extinguishment of tenancy rights.

Thus, the assessee has established that she and her family members had certain rights in the property. The Revenue has also examined this issue, subsequently, in the case of Ms.K.Nisha, one of the family members and accepted her claim, supra. Therefore, it is clear that such rights are falling u/s.2(14) r.w.s.2(47) of the Act and hence the impugned income is to be assessed under the head ‘capital gains’ only to the extent of each of the family members share of gains alone. Since, the AO has assessed the entire income under the head ‘other sources’ alone in the assessee’s hand and has not examined the relief allowable u/s.54F, we direct the AO to assess 1/4th of the share of LTCG in the assessee’s hand, as admitted by the assessee.

He shall examine the assessee’s claim u/s.54F in accordance with law and allow the appropriate relief u/s.54F. Since, the Ld.AR has not pressed other grounds of appeals, they are treated as dismissed.