9911796707
TMI Blog2020 (4) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... r is left open for adjudication de novo by the AO. Assessee's appeal is treated as allowed for statistical purpose. - ITA No.21(Bang)/2011 - - - Dated:- 22-1-2020 - Shri N.V. Vasudevan, Vice President And Shri A.K. Garodia, Accountant Member For the Appellant : Shri V. Chandrashekar, Advocate For the Revenue : Shri S. Tamil Selvam, JCIT ORDER PER SHRI N.V.VASUDEVAN, VICE PRESIDENT : This is an appeal by the Assessee against the order dated 11.10.2010 of CIT(A)-II, Bangalore, relating to AY 2006-07. 2. The only issue that arises for consideration in this appeal is as to whether the revenue authorities were justified in bringing to tax capital gain on sale of a property in the hands of the Assessee. If the answer to the above issue is in the affirmative, then the next issue to be decided would be whether the land which was subject matter of transfer could be said to be capital asset and whether the capital gain on sale of the said land is exigible to tax on capital gain. If the answer to the above issue is in the affirmative then the further issue that needs to be decided is as to whether the computation of capital gain by the revenue authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 8. The property which is subject matter of the present appeal was allotted to the 4 children (of which the Assessee is one) and they sold the property to M/S.Nirman Shelters Pvt.Ltd., under a registered sale deed dated 10.6.2005. The Children of the 4 sons of R.Rangappa Reddy have also joined this sale deed as Vendors. The owners of the property prior to sale of the property have sought conversion of the property for Non-Agricultural purpose i.e., Residental purposes and the necessary order dated 7.4.1995 was issued by the Assistant Commissioner, Bangalore South sub-division Bangalore. The period for which the conversion would remain valid was extended by the Deputy Commissioner, Bangalore District by an order dated 20.10.1997. The owners of the property have also obtained the BMRDA approval dated 4.4.1998 for formation of residential layout in the property. The sale of the property is stated to be for need of funds for their family necessities and to purchaser another suitable property and also for better up-keep and also for better future. The property was sold for a total consideration of ₹ 5 Crores. Out of the sum of ₹ 5 Crores the 4 sons of R.Rangappa Reddy a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his claim that admissions are not conclusive relied on several decisions in particular the decisions in CIT Vs. ARL Firm 56 ITR 67 (SC) and Pullongode Rubber Vs. State of Kerala 91 ITR 18 (SC). 12. The CIT(A) however did not agree with the submissions so made before him and he held that the capital gain has to be brought to tax only in the hands of the individual. The following were the relevant observations of the CIT(A): 4.2 The facts of the case as well as the appellant s submissions have been considered by me carefully. A perusal of the relevant documents reveals that the property in question was owned by Shri Rayappa Reddy, father of the appellant. There was a partition in the year 1975-76 and the deed of partition was registered in the office of the Sub Registrar vide registration No.3081/1975-76 and pursuant to the same certain properties were allocated to the four children of the said Shri Rayappa Reddy . As per the said partition, the schedule property mentioned in the deed has been divided among the appellant and his three brothers mentioned therein. The aforesaid partition has been duly ted upon and the khatas in respect of their respective shares have been duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land and the gain on sale was exigible to capital gain tax and also confirmed the manner of computation of capital gain as done by the AO. The CIT(A) also denied the benefit of Deduction u/s.54F of the Act claimed by the Assessee for the first time before him. 14. Aggrieved by the order of the CIT(A), the Assessee is in appeal before the Tribunal. The relevant grounds of appeal in the relevant grounds in this regard read thus: 1. The order of the authorities blow in so far as it is against the appellant is opposed to law, weight of evidence, probabilities facts and circumstances of the appellant s case. 2. The appellant denies himself liable to be assessed to capital gains tax of ₹ 1,44,94,857/- in the individual hands when the property admittedly belongs to the Hindu joint family of the appellant under the facts and circumstances of the case. 3. The authorities below were not justified in not holding that the land in question is capital asset within the meaning of sec.2(14) of the Act. The authorities below ought to have hold that the sale of the said agricultural land does not come within the purview of capital gains on the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Families The learned counsel for the Assessee pointed out that the property was originally ancestral property belonging to the bigger HUF of Rama Reddy and R.Rangappa Reddy and in the partition that took place pursuant to a decree of Court, the property became property of the smaller HUF consisting of R.Rangappa Reddy and his 4 children. On 30.12.1974, on partition of the smaller HUF of R.Rangappa Reddy and his 4 children the property became the property of the further smaller HUF comprising of the Assessee and his son Shri K.R.Shivasharan and daughter K.R.Divya. He submitted that at no time did the character of the property as ancestral changed and it continued to retain the character of ancestral property. The share of the Assessee and his children in the property that they got under the partition that took place on 30.12.1974, did not shed its character as joint family property. The above being the position in law, the fact that the Assessee filed a return in his individual capacity ignoring the fact that the property belonged to a still smaller HUF comprising of himself and his two children cannot be the basis to assess the capital gain in the hands of the Assessee. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue in accordance with law rather than on technicalities. It is fundamental that the right income has to be assessed in the right hands and the question whether the property is HUF property or that of the Assessee in his individual capacity should be assessed. Since the said issue which is fundamental and vital has not been decided by the CIT(A) and since the view of the Revenue on this aspect in the form of order of AO/CIT(A) is not available for consideration by the Tribunal, We are of the view that the order of the CIT(A) should be set aside and the entire issues that arise for consideration before the Tribunal should be directed to be decided afresh by the AO. In this regard we find the issue whether the property belongs to HUF or individual was raised by the Assessee for the first time only before CIT(A). We therefore set aside the order of the CIT(A) and remand the issue of taxation of capital gain to the AO for consideration de novo after affording opportunity of being heard to the Assessee. We make it clear that all issues set out in the earlier part of this order is left open for adjudication de novo by the AO. 18. In the result, the appeal is treated as allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
