P.R.NARAYANAN,KARAIKUDI vs. ITO INTERNATIONAL TAXATION 2(1), CHENNAI

आदेश / O R D E R

ITA Nos.2711, 2712, 2713 & 2714/CHNY/2017 are the

appeals filed by the different Assesses, against the order of the

Commissioner of Income Tax (Appeals)-16, Chennai, in ITA

No.110/CIT(A)-16/2009-10, dated 12.07.2017, order of the CIT(A)

-3, Madurai in ITA No.0123/2014-15 dated 15.03.2017, order of

the CIT(A) -16, Chennai in ITA No.110/CIT(A)-16/2009-10 dated

12.07.2017 & order of the CIT(A)-13, Chennai in ITA No.3/CIT(A)-

13/2009-10 dated 13.07.2017, all for the assessment year 2009-

10 respectively.

Shri T. Vasudevan, Advocate represented on behalf of the 2.

Assessee, and Shri B.Sagadevan, JCIT, Departmental Representative,

represented on behalf of the Revenue.

ITA Nos.2711 to 2714/CHNY/2017 :- 3 -:

ITA No.2713/CHNY/2017 is delayed 37 days & ITA

No.2714/CHNY/2017 is delayed 18 days, for which assessees have

filed necessary Affidavits for condonation of delay. The Revenue

has not raised any serious objection in regard to the condonation

of the delay. I have gone through the condonation petitions and

also the Affidavit filed by the assessees are found to be explained.

Consequently, the delay in filing of these three appeals is

condoned and the appeals of assessees are disposed off on merits.

appeals are disposed off by this common order.

who have not filed his returns for the relevant assessment year. Notice

u/s.148 was issued on the assessees on the ground that the assessee

along with the co-owners had sold land measuring 8420 sq.ft at Block

No.2, Ward No.3, Pattamangalam street, Mayavaram for a total

consideration of `71,57,000/-. However, the market value of property

was `1,02,00,000/-. Consequently, the ld. Assessing Officer invoked

the provisions of the section 50C of the Act and adopted the assessee’s

share at `17,07,140/- relating to Shri P.R.Narayanan and determined

long term capital gains in the hands of assessee in the individual

capacity. It was a submission that the assessee had in the course of

ITA Nos.2711 to 2714/CHNY/2017 :- 4 -:

assessment proceedings intimated the ld. Assessing Officer that the

property that was sold, was acquired by the deceased, the kartha

VR.RM.PR.Periakaruppan Chettiar on 31.03.1966 and the property was

the statues of the HUF. It was a submission that the ld. Assessing Officer had held that the assessee was entitled to 1/7th share of the

Hindu Undivided Family Property and notional partition had taken place

and on account of recording in the sales deed, and also on account of

last testament executed by late VR.RM.PR.Periakaruppan Chettiar, the

property was clearly an individual property. It was further submission

that the HUF, who was the owner of the property, had filed its return

till the assessment year 1992-93. It was submitted that the property

having been clearly shown as HUF property for the assessment year

1992-93 and no partition has been done by invoking the provisions of

the section 171(1) of the Act, it was the prayer that the sale of

property, the capital gains, if any, was liable to be assessed only in the

hands of HUF and not in the hands of the individuals.

partition vide Memorandum of Partition dated 11.09.2002 and the

capital gains that arises on sale of the property was liable to be

assessed in the hands of the individuals. The ld.D.R strongly supported

the orders of ld. Assessing Officer and the Ld.CIT(A).

ITA Nos.2711 to 2714/CHNY/2017 :- 5 -:

the section 171(1) of the Act clearly show that unless and until there is

a finding of partition given u/s.171(1) of the Act in respect of a HUF,

for all the practical purpose, a HUF hitherto assessed as undivided

shall for the purpose of the Act continued to be a HUF. In the present

case, admittedly there is no order u/s.171(1) of the Act. Though it

could be argued that only when an assessee claims a partition to have

been done in respect of the HUF, the ld. Assessing Officer could

complete an inquiry in respect of such partition and given order

u/s.171(1) of the Act, in view of the provisions of the section 171(2) of

the Act. The fact remains that neither the assessees nor any of the

coparceners of the family have claimed of in partition to have been

executed or of the HUF having been partitioned. This being so, there is

no inquiry by the ld. Assessing Officer u/s.171(2) of the Act and there

is no order u/s.171(1) of the Act. In the absence of order u/s.171(1) of

the Act, it cannot be said that there is a partition of the HUF property.

It is an admitted fact that the HUF of VR.RM.PR.Periakaruppan Chettiar

has filed its returns and assessment has been completed as a HUF for

assessment year 1992-93 and the property in question has been

shown in the Wealth Tax Returns of the said HUF in the return and

the assessment for assessment year 1992-93. This is clearly shows

the fact that the properties sold was a HUF property. The HUF having

ITA Nos.2711 to 2714/CHNY/2017 :- 6 -:

existed and the HUF having not been partitioned insofar as no order

u/s.171(1) of the Act has been passed, the capital gains, if any, that

arise on sale of the said property, which belonged to the HUF, can be

assessed only in the hands of HUF and not in the hands of the

individuals or the coparceners. This being so, I am of the view that

the assessment made bringing to tax capital gains in the hands of

individuals, who have sold the HUF property as coparceners, is

unsustainable and stands deleted.

P.R.Narayanan, Smt.RM. Visalakshi, Shri P.R.Alagappan, and Shri

P.R.Periakaruppan for Assessment year 2009-10 are allowed.

Order pronounced in the open court after conclusion of hearing on 22nd May, 2018, at Chennai.

Sd/- ( जॉज� माथन) (GEORGE MATHAN) �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai �दनांक/Dated: 22nd May, 2018. K S Sundaram

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