ITO 25(3)(2), MUMBAI vs. ISHWARIDEV I DUDEJA, MUMBAI

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ITA 4319/MUM/2010Status: DisposedITAT Mumbai24 November 2015AY 2006-073 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) did not properly examine the legal position and the sale/purchase deeds before allowing the assessee's claim based on a family settlement. The matter was restored to the CIT(A) for fresh consideration.

What were the facts?

The assessee received Rs. 26 lakhs as their share from the sale of land, claiming it as capital gains and seeking deduction under Section 54EC. The Assessing Officer treated it as income from other sources as the land was in the company's name.

What were the issues?

Whether the profit from the sale of land standing in a company's name should be treated as capital gains or income from other sources, and if a family settlement can override the legal ownership of the company.

Which sections of the Income-tax Act were involved?

Section 54EC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Hearing: 23.11.2015Pronounced: 23.11.2015

O R D E R PER B.R. BASKARAN (AM) The appeal filed by the Revenue is directed against the order dated 15.3.2010 passed by the ld.CIT(A)-35, Mumbai and it relates to the assessment year 2006-07.

2.

The revenue is aggrieved by the decision of the ld. CIT(A) in holding that the profit arising on sale of land is chargeable under the head “capital gains” as against the head “income from other sources”.

3.

None appeared on behalf of the assessee even though the notice of hearing were served on the assessee on several occasions by RPAD. Hence, we proceed to dispose of the appeal ex-parte, without the presence of assessee.

4.

We heard the ld.DR and perused the record. The assessee has received a sum of Rs.26 lakhs as his share on sale of land, which was standing in the name of M/s Fairtex Synthetics Pvt Ltd. The amount of Rs.26 lakhs has been claimed as capital gain and accordingly the assessee also claimed deduction u/s 54EC of the Income Tax Act, 1961. The AO noticed that the land was standing in the name of the company cited above and hence, he assessed the amount as income from other sources and also disallowed the claim of deduction u/s 54EC of the Act.

5.

In the appellate proceedings, the ld. CIT(A) allowed the claim of the assessee by placing reliance on a family settlement agreement.

6.

The ld. DR submitted that the land was standing in the name of the company referred above and the same was transferred by the company only and hence, family settlement reached between the assessee and other co-owners need not be recognised. since in the eyes of law the company alone shall be considered as owner of the property.

7.

A perusal of the order of ld. CIT(A) shows that he has not examined the above said legal position, but carried away by the entries passed in the books of account on the company referred above. It appears that the ld. CIT(A) has not examined the purchase deed as well as sale deed before arriving at his conclusion. Hence, we are of the view that the ld. CIT(A) has rendered his decision without properly appreciating the facts. Hence, in our view, this issue requires fresh examination at his end. Accordingly, we set aside his order and restore the matter to this file for fresh consideration after providing necessary opportunity of being heard to the assessee.

8.

In the result, the appeal filed by the revenue is treated as partly allowed for statistical purposes.

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