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Income Tax Appellate Tribunal, BANGALORE BENCH ‘C’, BANGALORE
Before: SHRI S.K.YADAV & SHRI A. K. GARODIA
This is an assessee’s appeal directed against the order of the ld.
CIT(A)-II, Bangalore dated 09-03-2016 for the assessment year 2009-10.
The grounds raised by the assessee are as under:
“1. The order of the Hon’ble CIT(A) is opposed to law and facts of the case. 2. The Hon’ble CIT(A) ought to have held that the sum of Rs.25 lakhs was a gift received from his father.
3. The Hon’ble CIT(A) erred in holding hat sum of Rs.25 lakhs received by the appellant is n account of sale of his share in the immovable property situated at Gandhinagar, Bangalore.
4. The Hon’ble CIT(A) failed to appreciate that the appellant was not the owner of the subject immovable property. 5. The Hon’ble CIT(A) reliance on the alleged family settlement deed was wholly misplaced and he appreciated that the said family settlement did not create any kind of ownership right in favour of the appellant. 6. The appellant craves for leave to add to delete from or amend the grounds of appeal”.
The ld. AR of the assessee submitted that on pages-5 –19 of the paper book is the copy of sale deed dated 22-05-2008 and in particular, our attention was drawn to page-11 of the paper book and it was pointed out that it is mentioned therein that the father of the assessee and his elder brother had jointly purchased the property in the year 1964 and later on, they entered in to partition deed in the year 1978, which was not a registered partition deed and as per the same, the property in question fell to the share of assessee’s father. It was further pointed out that the assessee’s father was in actual physical possession and enjoyment of the property in question and the schedule property stood in the name of assessee’s father. He also submitted that the deed of family settlement is also available on page-1 to 4 of the paper book. Thereafter, he has drawn our attention to page-23 of the paper book, it is the Khata Certificate for the property in question and pointed out that as per this also, the property is in the name of assessee’s father. He placed reliance on the judgment of the Hon’ble Punjab & Haryana High Court rendered in the case of Gunit Sidhu & Another Vs Bhai Shamider in RSA No.696/2005, dated 16-03-2009. He submitted a copy of the judgment.
He also placed relince on a judgment of the Hon’ble Apex Court rendered in the case of Bhoop Singh Vs Ram Singh Major as reported in AIR 1996(SC)196. He submitted a copy of this judgment also. Reliance was also placed on a judgment of the Hon’ble Uttarakhand High Court rendered in the case of Maniram Vs Padam Dutta as reported in AIR 2007 Uttarakhand 74. He filed copy of this judgment also and drawn our attention to para-12 of this judgment and pointed out that it was held in this case by the Hon’ble Uttarakhand High Court on the basis of another judgment of the same High Court rendered in the case of Ramcharan Das Vs Girija Nandini Devi AIR 1966 (SC) 323 that a transaction of family settlement does not amount to transfer nor does it create any interest as such and therefore, the same is not required to be registered. Thereafter, he submitted that written submission of the assessee are available on pages-20-23 of the paper book.
The ld. DR of the revenue supported the orders of the authorities below.
We have considered the rival submissions. We find that the issue in dispute was decided by the ld. CIT(A) as per para-4 of his order which is reproduced for the sake of ready reference;
“4. The claim of the appellant however, is that the sum of Rs.25,00,000/- was received as a gift from his father and that his father Shri K. Srinivasa Udupa, was the absolute owner of the property which is also mentioned in the sale deed. It is claimed that the deed of settlement is not a genuine document and therefore, no capital gain arises in the case of the appellant. The relevant document obtained from Dr. S Ramadas, brother of the appellant during the course of appeal had been made available to the appellant. From the above facts, it s clear that the appellant had a clear share or interest in the property bearing Municipal No.9, 3rd Cross, Gandhinagar, Bangalore, belonging to the father of the appellant Shri K. Srinivasa Udupa. This is evident from the clear demarcation of the amounts receivable by each member as mentioned in the sale deed. The deed of family settlement a copy of which as been furnished by Dr. S. Ramadas, brother of the appellant, corroborates the same. The claim of the appellant that this is a fabricated family settlement deed is without any basis as his signatures are found on the said document (as evident from the copy of the same perused by me) along with those of other family members who are party to the same. Even though there was no mention of the family settlement in the sale deed, a mention of each person’s share as bought above clearly shows an underlying settlement among all the persons interested in the said property belonging to Shri K.Srinivasa Udupa. Under such facts, the claim of the appellant that the sum of Rs.25,00,000/- received on sale of the said property is a mere gift from his father and not his share of interest in the property bearing Municipal No.9, 3rd Cross, Gandhinagar, Bangalore belonging to his father of which he was given 11% share. As per the family settlement deed and also the sale deed dated 22-05-2008, the share of the appellant is worked out of Rs.25,00,000/- which is roughly 11% of the total sale consideration of Rs.2,21,50,000/-”.
We find that as per the family settlement deed available on page- 1 to 4 of the paper book, it was decided that out of the seven persons mentioned in the family settlement deed, Shri Srinivasa Udupa, will get 34% and the remaining six parties i.e. to 2 to 7 will get 11% each and the present assessee is one of those remaining six parties. As per the judgment of the Hon‘ble Uttarakhand High Court cited supra, on which reliance has been placed by the ld.AR of the assessee, it has to be accepted that the unregistered family settlement Deed does not amount to transfer nor does it create any interest as such Reliance has been placed by the ld. AR of the assessee on this judgment in support of his contention that as per this family settlement deed, the assessee does not get any right in the property in question because the family settlement deed is not duly registered. In the case of Maniram Vs Padam Datta (Supra) also, the family settlement deed was not registered and under these facts, it was held by the Hon’ble High Court of Uttarakhand that as
per the apportionment of the property between three sons in fact it is execution of a non-testamentary document by Shri Jeet Ram Bahuguna extinguishing his own interest in his self acquired property and created new interest in favour of his sons, who had no interest therein. Therefore, the said document was compulsorily required to be registered and since it was not registered, Shri Jeet Ram Bahuguna continued his interest in the property and subsequent gift deed executed by him is valid. By applying ratio decidendi of this judgment of the Hon’ble Uttarakhand High Court, it has to be accepted that as per the family settlement partition deed, no right accrued to the present assesee because this family settlement partition deed is not registered. If that be so, the profit on sale of the property cannot be taxed in the hands of the present assessee but instead of this, such gain has to be taxed in the hands of the owner of this property i.e. the father of the present assessee. We hold that in view of this position of facts and law, the addition made by the AO in the present case is not sustainable. We therefore, delete the same and the AO is at liberty to take action as per law in the case of the father of the assessee who is the actual owner of the property in question.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on the date mentioned on the caption page.