2011 (9) TMI 1034 - AT - Income Tax

Summary

Issues involved: Appeal by revenue against deletion of Long Term Capital Gain addition and treatment of gift as invalid.

Long Term Capital Gain Issue:
The appellant, an individual and Chartered Accountant, filed a return for AY 2006-07 but did not declare long term capital gains on selling a property jointly owned with his brother. The AO added &8377; 15.57 lakhs as LTCG. The appellant argued a family arrangement where he gave up his share to his brother, who declared and paid tax on the entire capital gain. The AO rejected this, alleging tax evasion and misuse of the family arrangement. The CIT(A) ruled in favor of the appellant, stating the capital gain was already taxed in the brother's hands, and the family arrangement was valid without needing registration. The Tribunal upheld the CIT(A)'s decision, confirming that the appellant had no rights over the property due to the family arrangement.

Invalid Gift Issue:
The AO treated a gift as invalid due to lack of registration, leading to tax evasion allegations against the appellant. The CIT(A) found the gift valid under a family arrangement and not requiring registration. Citing legal precedents, the CIT(A) held that the AO's actions were improper. The Tribunal dismissed the revenue's appeal, affirming the validity of the family arrangement and the lack of need for registration in such cases.

In conclusion, the Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal regarding the Long Term Capital Gain addition and the treatment of the gift as invalid.