1992 (8) TMI 104 - AT - Income Tax

Summary

Issues:
1. Transfer of property from minor to a limited company nominee.
2. Assessment of income from the property in the hands of the minor.
3. Application of provisions of s. 52(2) for capital gains calculation.
4. Interpretation of Coop. Societies Act regarding property transfer.
5. Necessity of prior permission from the Housing Society for transfer.

Analysis:
The case involves an appeal by the assessee, a minor, regarding the assessment of income from a property purchased in his name by his guardian, who is also the managing director of a private limited company controlled by the family. The company decided to purchase the property from the minor, but faced difficulty due to Housing Society bye-laws. The CIT (A) directed the ITO to consider the income from the property in the minor's assessment, treating the amount paid by the company as a premium for licensing the property's use. The assessee appealed against this direction.

The main issue is whether a transfer of property occurred. The CIT (A) held there was no transfer, leading to no capital gain or loss. The absence of a registered document for transfer was cited as the reason. The legal position on property transfers without registration was discussed, emphasizing that unless specified under the Coop. Societies Act, transactions are not void. The Supreme Court's decision and relevant provisions were referred to for clarity.

The Coop. Societies Act's s. 47(2) was analyzed, highlighting the requirement of prior permission for property transfers subject to charges. The matter was remitted back to the ITO for investigation on whether prior approval was obtained from the Housing Society for the transfer. The judgment clarified that if such permission was granted, the transfer would be valid irrespective of the guardian's status as a member of the society.

In conclusion, the appeal was partly allowed, with the ITO instructed to verify the prior approval from the society for the transfer. The judgment emphasized the importance of compliance with the Coop. Societies Act provisions and the necessity of investigating prior permissions for property transfers.