TaxTMI 
TaxTMI 
2025 (3) TMI 990
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.... assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 3. The CIT (Appeals) -18, Chennai failed to appreciate that issue of validity of the search assessment order on the facts of the case being open for questioning at every stage, the search assessment was passed without jurisdiction as well as time barred inasmuch as further ought to have appreciated that the lack of seized material would vitiate the search assessment order completely. 4. The CIT (Appeals)-18, Chennai erred in sustaining the addition of Rs. 6, 48, 31, 420/- as Long-term Capital Gains and a sum of Rs. 4, 74, 82, 926/-as Short-term Capital Gains in the computation of taxable total income without assigning proper reasons and justification. 5. The CIT (Appeals) -18, Chennai failed to appreciate that settlement deed dated 05.03.2010 entered between the late appellant and his brother, Mr. Rajarathinam for the mutual exchange of 30 properties for 55 properties respectively wrongly construed as transfer of property / extinguishment of rights on such immovable properties for the purpose of computing Capital Gains on such trans....
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....reckoned as bad in law.] 11. The CIT (Appeals) -18, Chennai failed to appreciate that order of search assessment under Section 153C of the Act was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 12. The CIT (Appeals) -18, Chennai failed to appreciate that the entire re-computation of taxable total income in the invalid search assessment order was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 13. The CIT (Appeals) -18, Chennai failed to appreciate that there was no effective/proper opportunity given before passing the impugned order and ought to have appreciated that any order passed in violation of the principles of natural justice is nullity in law. 14. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 3.0 The brief facts of the case are that the assessee is an individual and was Partner of certain concerns of Saravana Store Group. The Search & Seizure action u/s. 132 of the Act was conducted in the business premises and residence of the assessee on 18.08.2011 notice u/s. 153C of the Act was issued by ....
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....een family members, family settlement deed was made and the joint holding properties between brothers were settled, which amounts to family arrangements and which would not amounts to "transfer". 6. On perusal of the submissions made by the assessee the ld. CIT(A) deleted the capital gain on transaction of family settlement by allowing the appeal of the assessee in his order dated 13.04.2014 by observing as under: "....6.2. I have perused the assessment order, grounds of appeal, written submissions and the family partition deed dt. 20.2.2010 in this regard. It is seen that the appellant along with his brothers have purchased certain properties jointly. Due to family arrangement, both the brothers agreed to partition the properties by way of settlement deed. The appellant by way of settlement dated 5.3.2010 has given certain properties to his brother Shri S. Rajaratnam as Gift. Similarly, Rajaratnam has also given certain properties to the appellant. But the AO has imposed Capital Gain tax by stating that the settlement deed made out by his brother, Shri Rajaratnam in favour of the appellant falls under "Transfer" as per section 2(47) of the Act. Thus, imposed STCG and L....
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.... in ITA Nos.1782/Mds./2015 vide order dated 29.12.2015 for assessment year 2011-12 that transfer of property made voluntarily and without consideration by way of Settlement Deed, all within the definition of Gift and there is no difference between the Gift and Settlement u/s. 49(1)) of the Act. While adjudicating this, the Tribunal placed reliance 'on Sec. 122 of the -Transfer of Property Act, 1882 and also from the Cochin Bench of Tribunal in the case of ACIT Vs. Anjana Mohan (2013) 36 CCH 0008(Cochin) and also Redington (India) Ltd. Vs. JCIT reported in 40 CCH 527 (Chennai). 15. In view of this, in our opinion the artificial distinction made by the lower authorities with reference to the Gift and Settlement is not appropriate and we are of the opinion that for the purpose of -Sec.49(1)(i), there is no difference between the gift and settlement and in the present case, the settlement made with the assessee's brother Mr. S. Rajaratnam and there cannot be any capital gains on this count. The ground raised by the Revenue is dismissed. 16. In the result, the appeals of assessee in [ITA No.985, 986, 987 & 988/16 and the appeal of Revenue in 1038/16 are partly ....
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..... In response assessee filed a detailed reply along with the statement of facts, grounds and objections and the case laws relied upon in support of their claim. Further, in his reply the assessee submitted the following: i) Family settlement is basically an agreement wherein all the family members mutually workout the mode of distributing the wealth amongst themselves. Undeniably all the parties to the settlement or well related to each other and have valid legal claim over the disputed assets. ii) The settlement deed was executed in order to avoid family disputes and in consequence of family arrangements. The settlement arrived at between the co-owners/brothers were Bonafide. Therefore, the settlement of joint holding properties between brothers would not fall under "transfer" as defined in section 2(47) of Act. iii) The properties received under gift would not attract tax. The transactions of settlement of properties clearly falls under gift to relatives and it would not attract tax. Even settlement of properties amongst various co-owners would not be covered by section 4(1)(c) of the Gift Tax Act. iv) The section 2(24) of the Indian Stamp A....
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....ugned transactions is not settlement perse, but is calling for more reasoned order or to checking for the judicial decisions relied upon by the assessee is applicable to be circumstances of the case and moreover the assessee's matter was not represented and put forward before the Hon'ble High Court. In light of the above submission the assessee prayed to consider the case on merit to allow the appeal and delete the addition made by the AO. 9. On perusal of the submission made by the assessee the ld. CIT(A)-18, Chennai confirmed the additions made by the AO in respect of the capital gains on transactions of the settlement by passing an order dated 12.01.2024 as detailed below: "....16. ln view of the foregoing, the findings in this case are summarized below:- i) The assessee had transferred his holding in respect of 30 properties to his brother and his brother transferred 55 properties to the assessee. The assessee also paid an amount of Rs. 17 crores to his brother. The impugned properties in this case are not joint family properties and they were held by two individuals (though closely related) in their names with distinct shares. ii) The assessee aff....
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....t on revenue account and further the said Ind-AS-115 apply only in respect of goods and does not apply to immovable property. Therefore, the term 'exchange' is to be applied strictly in the sense it is defined under the Transfer of Property Act, 1882 and as per the said provisions of the Transfer of Property Act as well as under the provisions of the Income-tax Act, 1961, it is a transfer, Therefore, 'exchange' in the case of the assessee is taxable under capital gains...." 10. Aggrieved by the order of the ld.CIT(A) the assessee preferred an appeal before us. The ld. AR for the assessee assailed the action of the ld. CIT(A), stated that the ld.CIT(A) have erred in interpreting the settlement/gift among the brothers of properties as transfer as per the provisions of the Act and confirming the action of the AO. The ld.AR reiterated the submissions made before the ld.CIT (A) in the second round of appeal and submitted a paper book containing 309 pages consisting of written submission made before the ld.CIT(A) after remanded the case by the Hon'ble Madras Court, copies of judicial precedents relied by the assessee, copy of settlement deed by S.Yogarathinam to S.Raja....
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.... 706 (Hon'ble Madras High Court) 7. R. Manohar in ITA No 138/MDS/2010 (Chennai Tribunal) 8. Jothi Rakesh Kapoor vs ITO, ITA No.583/Mum/2018 (Mumbai Trib) 9. CIT vs Atul Jain (2008) 299 ITR 383 (Hon'ble Delhi High Court) 10. Mrs. Urmila Mahesh Nathani Vs. ITO, ITA No.5921/Mum/2012 (Mumbai Tribunal) 11. Sonal A.Zaveri vs.ITO, ITA No.5968/Mum/2013(Mumbai Trib) 12. DCIT-2 (3), Mumbai Vs. Shri Paras D. Gundecha 2015 (10) TMI 2120 - ITAT Mumbai In view of the above arguments, the ld.AR prayed for setting aside the order of the ld.CIT(A) and allow the appeal of the assessee by deleting the addition made on account of capital gains. 11. Per contra, the ld. DR supported the orders of the AO and that of the ld. CIT(A) and prayed for confirming the same. 12. We have heard rival contentions perused the material available on record and gone through the orders of the authorities below. The impugned order of ld.CIT(A) was passed in consequent to the decision of Hon'ble Madras High Court in the first round proceedings in TC Appeal No.234 of 2018 dated 08.07.2020 filed under Section 260A of the Act by the revenue against the this Tr....
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....of the property is defined in Section 2(xxiv) of the said Act so as to include settlement. 20. Therefore, it was argued that there was no confusion in understanding the scope of gift and the settlement deed under consideration should be viewed as gift falling within the provisions in Section 47 (iii) of the Act and the exception being such transaction not to be regarded as transfer for the purpose of imposing Capital Gains tax would tilt the entire case in favour of the assessee herein. Furthermore, ld. AR had brought to our attention that a gift attracts stamp duty and on the contrary, settlement attracts concessional rate of stamp duty. However, the gift transaction that had occurred between relatives (Brothers in the present case) should be reckoned as settlement so as to reckon the same as not a transfer for the purpose of settlement in Section 2(47) r.w.s 45/48 of the Income Tax Act, 1961. This above fact could not be disputed by the ld. DR when the same was brought to their attention. 21. This Tribunal is of an opinion that attempt of the ld. CIT(A) in clubbing both the settlement deeds (one by the assessee in favour of the brother and the other by the brother in favour....
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....f law. When there is no transfer there is no capital gain and consequently no tax on capital gain is liable to be paid. 27. In deciding the issue of settlement deed between the brothers in the case on hand, we take note of the decision of the Hon'ble Apex court in the case of SS Pillai vs. KS Pillai AIR 1972 SC 2069 (SC), wherein it was held observed that if in the interest of the family, properties and family peace, the close relatives settle their dispute amicably, this court will be reluctant to disturb the same. 28. The Hon'ble Madras High court in the case of CIT vs. R. Ponnammal 164 ITR 706, gone one step ahead and witnessed that when the parties enter into a family arrangement, the validity of the family arrangement is not be judged with reference to whether the parties who raised disputes or rights or claims in certain properties had in law any such right or not. The members of a joint family may, in order to maintain peace and bring about harmony in the family, enter into a family arrangement and if the arrangement is entered into bonafide and the terms thereof are fair, courts will normally give assent to such an arrangement rather than avoid it. Even if a party to ....