SMT. CHITRA BHASKARAN,CHENNAI vs. ITO, CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) –VI, Chennai, dated 09.02.2012 and pertains to assessment year 2007-08.

Sh. N. Devanathan, the Ld.counsel for the assessee, submitted that the only issue arises for consideration is disallowance of ₹1 Crore paid to the husband of the assessee, Dr.K. Chockalingam being the confirming party in the sale deed executed by the assessee. According to the Ld. counsel, the original owner of the property was Dr.K. Chockalingam, who is none other than the husband of the assessee. By settlement deed dated 24.12.2001, Dr. Chockalingam settled the property in favour of his wife Smt. Chitra Chockalingam and Dr.Deepa Chockalingam. According to the Ld. counsel, Smt. Chitra Chockalingam and Dr.Deepa Chockalingam executed sale deed in respect of the property at Luz Church Road, Mylapore, Chennai. In the sale deed, Dr. Chockalingam was referred as confirming party. The assessee claimed that a sum of ₹1 Crore was paid to Dr. Chockalingam. According to the Ld. counsel, unless the assessee paid ₹1 Crore, the sale cannot be completed. Hence, according to the Ld. counsel, it has to be allowed. On a query from the Bench, after the execution of settlement deed on 24.12.2001 by Dr. Chockalingam in favour of the assessee and his daughter, Dr. Deepa Chockalingam, what is the title or right remains in favour of Dr. Chockalingam for payment of any amount for sale of property? The Ld.counsel submitted that but for the payment of ₹1 Crore, the property would not have been sold at all.

On the contrary, Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that after execution of settlement deed on 24.12.2001 by Dr. Chockalingam, the assessee’s husband, he has no right whatsoever over the property at Luz Church Road, Mylapore, Chennai. After the settlement deed dated 24.12.2001, the assessee and her daughter executed the sale deed during the year under consideration. Therefore, according to the Ld. D.R., on the date of sale of the property by the assessee and her daughter, Dr. Chockalingam, being the assessee’s husband, had no title or right over the said property.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that Dr. Chockalingam was the original owner of the property. On 24.12.2001, Dr. Chockalingam executed a settlement deed in respect of the property at Luz Church Road, Mylapore, Chennai, in favour of his wife, the assessee herein and his daughter Dr.Deepa Chockalingam. Therefore, by virtue of settlement deed dated 24.12.2001, the assessee and her daughter became the absolute owner of the property.

On execution of settlement deed in favour of the assessee and her daughter Dr.Deepa Chockalingam, Dr. Chockalingam has no right or title whatsoever over the property. Dr. Chockalingam happened to be the assessee’s husband. The assessee claims that but for the payment of ₹1 Crore, the property could not be sold. This Tribunal is unable to accept the claim of the assessee. The payment of ₹1 Crore to Dr. Chockalingam is only application of income. Having no right over the property on the date of sale, Dr. Chockalingam need not be a confirming party for sale of the property. By referring him as confirming party in the sale deed, the assessee is making an attempt to reduce the capital gain. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the order of the Assessing Officer. This Tribunal do not find any reason to interfere with the orders of the lower authorities and accordingly the same is confirmed.

In the result, the appeal filed by the assessee is dismissed.