2018 (11) TMI 1901 - AT - Income Tax

Tribunal rules in favor of assessee on long-term capital gains assessment, emphasizing actual consideration receipt.

Smt. Rajeshwari Sureshprasad Tiwari Versus The Income Tax Officer, Ward 2, Latur

Smt. Rajeshwari Sureshprasad Tiwari Versus The Income Tax Officer, Ward 2, Latur - TMI Issues Involved:Assessment of long term capital gains in the hands of the assessee in the year of entering into a Development Agreement; Rejection of the claim of partition in the family property; Assessment of income from capital gains in the hands of the assessee as Manager/Karta of the HUF; Dispute over the gender of the Karta of the HUF; Levy of interest under sections 234A, 234B, and 234C.Analysis:1. Assessment of Long Term Capital Gains:The appeal challenged the assessment of income from long term capital gains in the year the assessee entered into a Development Agreement. The Assessing Officer considered the transfer of rights under the Agreement as attracting capital gains. However, the Tribunal found that since the assessee had only received an advance and not the full consideration, the transaction did not constitute a transfer under the Income-tax Act. Citing judicial precedents, the Tribunal ruled that the assessee was not liable to pay capital gains tax at that stage.2. Rejection of Family Partition Claim:The appeal contested the rejection of the claim of partition in the family property. The Assessing Officer held that the property exclusively belonged to the assessee, despite family members being consenting parties to the Development Agreement. The Tribunal, however, focused on the intentions of the parties as per the Agreement, determining that no capital gains arose at the time of entering into the Agreement. Consequently, the issue of family partition became irrelevant due to the non-existence of capital gains.3. Assessment of Income as HUF Manager/Karta:The appeal disputed the rejection of the claim that the assessee, as the Manager/Karta of the HUF, should not be assessed for the capital gains. The Tribunal, based on the absence of capital gains, did not delve into this issue, rendering it moot in the current context.4. Dispute Over Gender of HUF Karta:The appeal challenged the notion that only male members could be the Karta of an HUF, contrary to the assessee's claim. However, since the Tribunal did not find any capital gains liable for assessment, the issue of the gender of the Karta was not addressed in the judgment.5. Levy of Interest under Sections 234A, 234B, and 234C:The appeal contested the justification for levying interest under these sections. However, the Tribunal did not provide a specific ruling on this issue in the judgment, focusing primarily on the capital gains assessment matters.In conclusion, the Tribunal allowed the appeal, ruling in favor of the assessee on the grounds related to the assessment of capital gains. The rejection of the family partition claim and other associated issues became immaterial due to the absence of capital gains liability. The judgment highlighted the importance of the actual receipt of consideration in determining the taxability of capital gains, supported by relevant legal precedents.