DCIT, CHENNAI vs. S.RAJARATHINAM, CHENNAI

आदेश / O R D E R

PER GEORGE MATHAN, JUDICIAL MEMBER

These are appeals files by the Revenue against the common

order of the Commissioner of Income-tax (Appeals)-18, Chennai in ITA

Nos.92 to 94/14-15 dated 08.02.2016 for assessment years 2010-11 &

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2012-13 and correspondingly, the assessee filed Cross Objections in

support of the order of ld.CIT(A), involving identical issues, therefore,

the appeals and cross-objections are taken up together for

adjudication.

Ms.Jahrna B.Harilal represented on behalf of the Assessee.

the the Revenue has challenged the action of the ld.CIT(A) in holding

that the mutual relinquishment of respective shares in favour of each

other by the assessee and his brother is a bona fide one to resolve

family disputes by equitable division or allotment of properties

between various members of the family. It was a submission that the

assessee is an individual belongs to Saravana Group. Due to various

disputes between the assessee and his brother, family arrangements

had been arrived at by which various properties had been distributed

between the assessee and his brother Shri S.Yogaratnam. It was a

submission that the properties are not inherited or HUF properties, the

assessee had relinquished 50% shares in jointly held properties in

favour of the brothers vide Settlement Deed dated 05.03.2010 and

Shri S.Yogaratnam had also relinquished 50% in shares certain other

jointly held properties by way of another Settlement. It was a

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submission that by the Settlement Deed, what has been done is the

property has been transferred from one hand to another and

consequently capital gains was liable to be levied, which was done by

the ld. Assessing Officer. It was a submission that Ld.CIT(A) following

the decision of jurisdictional High Court in the case of CIT

Vs.A.L.ramanathan in 245 ITR 494(Mad.), as also the decision of the

Co-ordinate Bench of this Tribunal in the case of M/s.Saravana Stores

(Tex) for assessment year 2003-04 in ITANo.2079/Mds./2008 had held

that the partition is a bona fide one and capital gains was not leviable

on the same. It was a submission that the order of the CIT(Appeals)

is liable to be reversed.

Tribunal has decided the issue in the case of Shri S.Yogaratnam in 985

to 988, 1037 & 1038/Mds./2016 vide order dated 15.03.2017 for

assessment years 2006-07 & 2010-11 & 2012-13 wherein it has been

held in paras 13.2, 13.3, 14 & 15 as follows:-

“13. 2. The facts of the issue are that the along with his brother have purchased various properties jointly. Due to family arrangement both had agreed to partition the properties, which were purchased jointly by way of Settlement Deed dated 05.03.2010. The assessee relieved from the joint holdings in crain properties and settled the same as GIFT to his brother, Mr.S.Rajaratnam out of his own free will and love & affection while being in a very sound state of mind and that there has been no kind of pressure and coercion on him. Similar things had also

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been done by his brother in favour of assessee. The AO has imposed tax by alleging that the Settlement Deed made out by his brother in favour of assessee falls under “Transfer” as per Sec.2(47) of the Act. Thus, he imposed Short term capital gains and long term capital gains on the difference between guideline value and value shown in the books for the properties settled in favour to the assessee. Aggrieved, the assessee carried the appeal before the Ld.CIT(A).

13.3 On appeal, the Ld.CIT(A) observed that due to family arrangement, both the brothers agreed to partition the properties by way of settlement deed. The assessee by way of settlement dated 5.2.2010 had given certain properties to his brother Mr.S.Rajaratnam as Gift. Similarly, Mr.S.Rajaratnam had also given certain properties to the assessee. But the AO has imposed capital gains tax by stating that the settlement deed made out by his brother, Mr.S.Rajaratnam in favour of the assessee falls under ‘Transfer” as per section 2(47) of the Act. According to Ld.CIT(A), in the present case, the first question to be addressed is whether property jointly purchased by brothers partitioned by way of settlement will amount to transfer within the meaning of sec.2(47) of the Act or not. Ld.CIT(A) following the decisions of jurisdictional High Court in the case of CIT Vs. A.L.Ramanathan in 245 ITR 494(Mad.) and CIT Vs. A.L.Ramanathan in 245 ITR 494 (Mad.) and Tribunal decision in ITA No.2079/Mds./2008 in the case of M/s.Saravana Stores (Tex) for assessment year 2003-04 , Ld.CIT(A) deleted the addition on th reason this is a bonafide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family. Aggrieved, the Revenue is in appeal before us.

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It was the prayer that the issue was squarely covered by the decision

of co-ordinate Bench of this Tribunal in the case of

Shri S.Yogaratnam(supra).

facts in the present case clearly shows that the issue as to whether the

Family Settlement arrived at between assessee and his brother,

Shri S.Yogaratnam, is squarely covered by the decision of Co-ordinate

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Bench of this Tribunal in the case of Shri S.Yogaratnam referred to

supra, respectfully following the findings as arrived at by the

Co-ordinate Bench of this Tribunal in Shri S.Yogaratnam(supra),

finding of the Ld.CIT(A) stands confirmed.

Revenue has challenged the action of the ld.CIT(A) in deleting the

addition made by the ld. Assessing Officer on account of the cessation

of liabilities in the name of Shri S.Selvarathinam. It was a submission

that as liability was more than three years old, the same was liable to

be added by invoking the provisions of the section 41(1) of the Act.

covered by the decision of Co-ordinate Bench of this Tribunal in the

case of Shri S.Yogaratnam referred to supra, wherein in para-12, the

Tribunal has held as follows:-

“12. We have heard both the parties and perused the material on record. Before the AO, the assessee had not brought on record to show what was nature of liability whether any deduction was allowed to the assessee in earlier year or not. No such information made available to the AO. Before the Ld.CIT(A), the assessee produced the account copies of earlier years and from that ledger accounts, the Ld.CIT(A) came to a conclusion that it is only an unsecured loans payable to

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assessee’s brother Shri Rajaratnam and he observed that it is a capital liability. On this reason, he deleted the addition made u/s.41(1) of the Act. In our opinion, whenever Ld.CIT(A) collected any fresh evidence in the course of proceedings before him, it is appropriate to call for comment from the AO and in this case, the AO was deprived of comment the evidences produced before the Ld.CIT(A). Hence, we are of the opinion that the issue has to be considered by AO and to decide afresh in accordance with law. Accordingly, we set aside the order of lower authorities and remit the issue in dispute to the file of AO for fresh consideration. The AO has to decide the issue after giving adequate opportunity to the assessee.”

The ld.A.R vehemently supported the order of the Ld.CIT(A).

that the issue is squarely covered by the decision of Co-ordinate Bench

of this Tribunal in the case of Shri S.Yogaratnam referred to supra,

respectfully following the findings as arrived at by the

Co-ordinate Bench of this Tribunal in Shri S.Yogaratnam(supra),

finding of the Ld.CIT(A) stands confirmed.

support of the order of the CIT(Appeals) and as we have already

upheld the order of the CIT(Appeals) in respect of both the appeal of

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the Revenue, the Cross objections filed by the assessee become

infructuous and stand dismissed as infructuous.

Cross Objections filed by the assessee are dismissed.

Order pronounced in the open court on 17th December, 2018, at Chennai.

Sd/- Sd/- ( जॉज� माथन) (ए. मोहन अलंकामणी) (GEORGE MATHAN) (A.MOHAN ALANKAMONY) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated: 17th December, 2018. K S Sundaram

आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�त/CIT 2. ��यथ�/Respondent 5. �वभागीय ��त�न�ध/DR 3. आयकर आयु�त (अपील)/CIT(A) 6. गाड� फाईल/GF