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Income Tax Appellate Tribunal, ‘ A’ SMC BENCH : CHENNAI
Before: SHRI GEORGE MATHAN
आदेश / O R D E R appeals filed by the different Assesses, against the order of the Commissioner of Income Tax (Appeals)-16, Chennai, in dated 12.07.2017, order of the CIT(A)
-3, Madurai in 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. to 2714/CHNY/2017 :- 3 -:
The appeals in is delayed 37 days, 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.
As the issues in all these appeals are inter-connected, all appeals are disposed off by this common order.
It was submitted by ld.A.R that all the assessees are individuals, 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 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.
In reply, the ld.D.R submitted that the assessee had done 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). to 2714/CHNY/2017 :- 5 -:
I have considered the rival submissions. A perusal of provisions of 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 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.
In the result, appeals of the assessee in respect of Shri 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.