TaxTMI 
TaxTMI 
2019 (9) TMI 732
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....ed that assessee has acquired the Bungalow at C-29, Friends Colony, New Delhi, due to relinquishment of rights in the said property by three brothers of the assessee for Rs.NIL. But it is a fact that the assessee made sanctioned a bank loan of Rs. 15 crores and disbursement was made by the bank of Rs. 12 crore, Rs. 4 crore to each of three brothers. It means the brothers were paid a sum against relinquishment of their rights in the property. Once payment is made for such relinquishment, it can no more be said that such transfer was out of "love and affection", as applicable in case of a relative. A transaction between relatives can be either out of pure "love and affection" without any consideration or it could be a normal transaction of transfer of property for a consideration in which case it should be as per market condition and at market rate. In this case since amount of Rs. 4 crore is paid to each of three brothers in lieu of their relinquishing 1/3rd ownership in above bungalow, hence this transfer is for "consideration" and not out of "love and affection". The A.O. noted that in the Memorandum of Family Settlement it is not clear about the actual price of the bungalow. Eve....
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....shed his shares in other properties. The Ld. CIT(A) also noted that assessee has attempted to escape tax liability by camouflaging this commercial transaction as a family settlement and apportioning of property out of love and affection. The Ld. CIT(A) held it to be a colourable device used by the assessee to escape tax liability. The Ld. CIT(A) also noted that Rs. 12 crores have been distributed to brothers of the assessee to relinquish their rights in the property in question. The Ld. CIT(A) also noted that since it is a commercial transaction, therefore, it is not out of love and affection. The Ld. CIT(A), therefore, confirmed the finding of fact recorded by the A.O. and confirmed the addition under section 56(2)(vii)(b) of the I.T. Act, 1961. 5.1. The Ld. CIT(A) in alternate also noted that assessee was bound to explain the source of investment in the property and will fall within the mischief of investment not fully disclosed in the books of account as per Section 69B of the I.T. Act, 1961. So, difference in the circle rate and investment of Rs. 12 crores shown by the assessee would still be taxable in his hand. The Ld. CIT(A), accordingly, dismissed the appeal of assessee. ....
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....2) of the I.T. Act, therefore, said provisions are not applicable to the case of assessee. It is not case of the authorities below that Family Settlement Deed has not been acted upon. Learned Counsel for the Assessee further submitted that Settlement Deed has been entered into by the family members in order to maintain peace and bring harmony in the family, therefore, it is not a commercial transaction. All the brothers divided family properties, therefore, there is no question of escapement of liability. The Release Deed did not mention if any consideration have been paid by assessee. Family Settlement was made for adjustment of rights and distribution of properties in such a manner that peace and harmony is maintained in the family and the assessee received the property in question on account of Family Settlement. He has submitted that Bank loan of Rs. 12 crores is part of total amount of Rs. 20 crores which is mentioned in the Settlement Deed, therefore, the Ld. CIT(A) was not justified in giving adverse findings. As per the Settlement Deed, various properties after division have been allotted to assessee and his brothers and in exchange of these properties, each brother has rec....
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....ansfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub-clause: Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property; (c) any property, other than immovable property,- (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration : Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section ....
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....indu undivided family, any member thereof;] (f) "stamp duty value" means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property; 9.1. The above provision provides where an individual receives in any previous year, from any person or persons on or after 01.10.2009 any immovable property; (i) without consideration, the stamp duty value of which exceeds 50,000 rupees, stamp duty value of such property; (ii) for consideration which is less than the stamp value of the property by an amount exceeding 50,000 rupees, the stamp duty value of such property as exceeds such consideration shall be chargeable to Income Tax Act under the Head "Income from Other Sources". However, the Second Proviso provides that this clause was not applied to any sum of money or any property received from (a) from any "relative." The definition of "Relative" have been provided in Explanation-(e) to the aforesaid provisions means brother or sister of the individual. Thus, in case of the transaction carried out by the individual in respect of immovable property as explained above is....
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....tax, the inequalities would set in as the share of the recipient will diminish to the extent of tax. Since the amount paid during the course of partition was to settle the inequalities in partition, therefore deemed to be immovable property. Such amount was not an income liable to tax." 9.3. In this case, since there was a Family Settlement between the assessee and three brothers and they have acted upon Family Settlement Deed and distributed various properties among themselves and necessary rights and title are transferred in favour of each brother would show that parties have entered into genuine transaction. As per the Family Settlement Deed, it was agreed that property in question with superstructure shall be taken by the assessee and that as per the Settlement Deed, the assessee has to contribute a sum of Rs. 20 crores from his own resources/ capital or through the borrowed funds as part of the Family Settlement to balance the settlement between brothers. Therefore, no commercial transaction have been entered into between the assessee and his brothers and there is no colourable device. We may also note that admittedly settlement was executed for distribution of different pro....