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TMI Blog2020 (12) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... is warranted. Even oral gift is permissible and it need not be deduced into writing especially when it is done amongst close family members as there are least chances to suspect the same. This observation made by us gets further strengthened in view of the undisputed fact that the total sale consideration paid by Oricon Realty Pvt. Ltd., for this subject mentioned property at Pisoli Village, Pune was ₹ 6 Crores only. In fact the ld. CIT(A) also in his appellate order categorically states that the total sale consideration of the property is only ₹ 6 Crores and there is absolutely no dispute over the same. Total sale consideration of the property of ₹ 6 Crores should be divided equally among the four children of the assessee i.e. Mrs. Asha Arun Gawli. It is not the case of the revenue that ₹ 1,20,00,000/- paid by Oricon Realty Pvt. Ltd., to the assessee i.e. Mrs. Asha Arun Gawli was over and above the total sale consideration of ₹ 6 Crores. Hence, it could be safely concluded that the amount received in the sum of ₹ 1,20,00,000/- by the assessee i.e. Mrs. Asha Arun Gawli would have to be treated as gift received by the assessee i.e. Mrs. Asha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred to as Act) by the ld. Income Tax Officer 21(1)(2), Mumbai (hereinafter referred to as ld. AO). ITA No.7324/Mum/2018 (A.Y.2012-13) This appeal in ITA No.7324/Mum/2018 for A.Y.2012-13 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-48, Mumbai in appeal No.CIT(A)-48/IT-306/AC-21(3)/2018-19 dated 26.10.2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 26/03/2015 by the ld. Asst. Commissioner of Income Tax 21(3), Mumbai (hereinafter referred to as ld. AO). Facts of appeal in the case of Mrs. Asha Arun Gawli in ITA No.4220/Mum/2017 and the proceedings before the ld. AO and ld . CITA 2. The only effective issue to be decided in this appeal is as to whether the sum of ₹ 1,20,00,000/- received by the assessee from the sale of plot of land could be treated as long term capital gains or income from other sources. The interconnected issue involved therein to be decided is as to whether assessee would be entitled for deduction u/s.54/54F and 54EC of the Act if the aforesaid receipt is assessed as long term capital gains. 3. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained a Certificate from CIT, City VII, Mumbai, wherein the said land was declared by her along with her 4 minor children namely (i) Miss. Geeta Gawli (ii) Miss Yogita Gawli, (iii) Master Mahesh Gawli and (iv) Master Yogesh Gawli. The declaration under the VDIS scheme was made by the assessee in her capacity as natural guardian of the minor children. The ld. AO has noted that the relevant Purchase Agreement dated 25.06.1992 showed the said four minor children viz.(i) Miss. Geeta Gawli- 9 yrs. (ii) Miss Yogita Gawli, 7 yrs. (iii) Master Mahesh Gawli-4 yrs. and (iv) Master Yogesh Gawli - 3 yrs. as purchasers and being minors, the assessee executed the deed of purchase on their behalf. Thus according to the ld. AO, the assessee was not the owner of the said immovable property. 3.2. The ld. AO has observed that as per the Agreement for Sale of the said immovable property dated 31.10.2011, the owners/vendors were the four children of the assessee viz. (i) Miss. Geeta Gawli - 28 yrs. (ii) Miss Yogita Gawli, 24 yrs. (iii) Mahesh Gawli - 23 yrs. and (iv) Yogesh Gawli - 21 yrs and the assessee was the consenting party. The ld. AO has noted that out of the safe consideration of ₹ 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale proceeds equally amongst the assessee and the other co-owners. From the above facts you will find that, even the assessee did not have a clear title but it is for sure that she had an enforceable right and the interest (partly or fully) in the property by virtue of VDIS made by her declaring the above property in her declaration in 1997 supported by VDIS certificate or by way of deemed gift by the co-owners. It cannot be disputed that the property which was sold for ₹ 6,00,00,000/- was not a capital asset and therefore any sum received in lieu of its transfer would be chargeable only as capital gains whether in the hands of the assessee or any other persons as the case may be. The nature of receipt will not alter even if the assessee is not having an absolute title. In the case of M/s TATA Services Limited 122 ITR 594 (BOM) it has been held that the words and phrases Property under section 2(14) includes any rights which can be called property. Similarly in the case of M/s Sterling Investment Corporation 123 ITR 441 (BOM) a contractual right obtained under the contract of sale will be considered as capital Asset under section 2 (14). In the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the immovable property and not joint owner of the property thereon, and accordingly treated the amount received in the sum of ₹ 1,20,00,000/- as income from other sources . Since the receipt of ₹ 1,20,00,000/- was taxed in the head of income from other sources , the ld. AO consequently denied the benefit of exemption claimed u/s.54 / 54F and 54EC of the Act for further investments. 3.7. During the course of first appellate proceedings, the assessee argued that it is the assessee who has purchased the property at Pisoli Village, Pune in the name of her four minor children and accordingly, had taken the role of natural guardian of the children for total consideration of ₹ 2,15,183/- and moreover in the year 1997, the assessee on behalf of four children had declared the investment made in land at Pisoli Village, Pune of ₹ 2,15,183/- under VDIS scheme 1997 and paid the full tax thereon and had obtained certificate from the ld. Administrative Commissioner for the same. It was vehemently argued that the agreement should be read as per the understanding of the parties to the agreement i.e. assessee, assessee s children and the purchaser and the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received or immediately thereafter, the plea of the assessee is indivisible. With the aforesaid observations, he upheld the action of the ld. AO. 4. Aggrieved, assessee is in appeal before us. Facts of appeal in the case of Shri Mahesh Arun Gawli in ITA No.7323/Mum/2018 and the proceedings before the ld. AO and ld . CITA 5. The only issue involved in this appeal is that whether the ld. CIT(A) was justified in upholding the action of the ld. AO in treating the sale consideration at ₹ 1,50,00,000/- on sale of land as against ₹ 1,20,00,000/- reported by the assessee in the facts and circumstances of the instant case. 5.1. Facts are that assessee and his three siblings namely i)Miss Yogita Gawli ii) Mr Yogesh Gawli iii) Miss Geeta Gawli sold a property at the Pisoli, Pune, for ₹ 6 crores. As per assessee, the sale proceeds of this property were divided equally in 5 parts of ₹ 1,20,00,000/- each and same was shown as sales consideration in the hands of assessee, his 3 siblings and his mother (total 5 parts). Therefore, as per assessee, the total sale consideration of ₹ 1.20 crore each was shown in the hands of 5 individuals. For computing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e upheld the action of the ld. AO that the total sale consideration of ₹ 6 Crores need to be divided equally only among four persons including the assessee and assessee s share thereon would amount to ₹ 1,50,00,000/- towards sale consideration arising on sale of land at Pisoli Village, Pune. He further observed that the payment of ₹ 1,20,00,000/- to assessee s mother would only have to be treated as an application of receipts by the children including the assessee. He categorically observed that merely part of the consideration was handed over to the assessee s mother either by co-owners directly or by the purchaser at the behest of the co-owners, when the mother was not owner of the property as per the sale document itself, the said receipt will not give raise to capital gains in the hands of the mother. The ld. CIT(A) however, rectified the mistake committed by the ld. AO with regard to giving deduction for 1/5th share of cost of acquisition in the hands of the assessee, to 1/4th share as there were only four co-owners including the assessee in the property. The ld. CIT(A) directed the ld. AO to recompute the capital gains accordingly. Facts of appeal in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /10/2011 only as consenting party and not as co-owner of the property. This is basically done, in our considered opinion, only to protect the interest of the purchaser i.e. Oricon Realty Pvt. Ltd., in order to avoid future dispute on the aspect of title of the property. An act which is done for the purpose of avoiding any future dispute or for the purpose of administrative convenience, would not confer any ownership right in the hands of the assessee i.e. Mrs. Asha Arun Gawli. Hence, the assessee i.e. Mrs. Asha Arun Gawli can never be held as a beneficial or legal owner of the land situated at Pisoli Village, Pune. 8. In view of the aforesaid observations, we hold that total sale consideration of ₹ 6 Crores should be divided equally only among the four children at ₹ 1,50,00,000/- each of the assessee i.e. Mrs. Asha Arun Gawli. Correspondingly, the cost of acquisition benefit together with indexation thereon, should also be given only for 1/4th share to each of the co-owner (i.e 4 children) excluding the assessee. 8.1. With regard to the decision relied upon by the ld. AR on the Hon ble Jurisdictional High Court in the case of Amol C Shah (HUF) vs. ITO in Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total sale consideration of ₹ 6 Crores. Hence, it could be safely concluded that the amount received in the sum of ₹ 1,20,00,000/- by the assessee i.e. Mrs. Asha Arun Gawli would have to be treated as gift received by the assessee i.e. Mrs. Asha Arun Gawli from her four children in the interest of substantial justice and fair play. While making this decision, we are conscious of the fact that assessee had reported capital gains treating herself as one of co-owners in the subject mentioned property and had reported capital gains thereon. Since, we have held that the said receipt of ₹ 1,20,00,000/- is neither sale consideration on sale of property nor it could be taxed as income from other sources in her hands and it is only a gift received from 4 children which is exempt u/s.56(2) of the Act, the same would ultimately result in a situation where the assessed income becomes lower than the returned income. We are conscious of this fact but at the same time, the revenue could not be unjustly enriched with unjust tax and the department shall be entitled to collect just and right tax in accordance with law from the right person. It is trite law that there is no est ..... X X X X Extracts X X X X X X X X Extracts X X X X
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