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TMI Blog2003 (12) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act, 1961. (5) The assessment order passed by the CIT(A)-XI is not in conformity with the legal provisions as the said order seeks to enhance the assessment without giving the appellant a reasonable opportunity of showing cause against the said enhancement." ITA Nos. 5759 5760 Common grounds raised are as under: "(1) The learned CIT(A)-XI, Mumbai, erred in law and on facts by adjudicating on other grounds of appeal after coming to the conclusion: 'the assessment made on the Body of Individuals (BOI) is set aside with the direction that the individual members of the BOI should be assessed in the light of this order. (2) The learned CIT(A)-XI, erred in law and on facts by confirming the finding of the AO that the sum of Rs. 18,00,000 paid to Ms. Usha Bolinjkar is not deductible from the gross sale proceeds. (3) The learned CIT(A)-XI, erred in law and on facts by confirming the finding of the AO that the sum of Rs. 18,00,000 paid to Ms. Usha Bolinjkar is not an income diverted at source and hence forms part of the income. (4) The learned CIT(A)-XI, erred in law and on facts by confirming the disallowance of deduction under s. 54 of the IT Act." 3. Brief facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bolinjkar, should not be allowed and further for the reasons mentioned in his order exemption under s. 54 in the cases of individuals should not be given while passing fresh assessment orders in individual hands in pursuance of his setting aside order. Aggrieved, the assessees are before us in all these appeals, i.e. two BOI appeals and two individual appeals. The BOI appeals are filed as a matter of abundant caution as though assessments in BOI have been set aside but there are certain directions passed in these orders, which are prejudicial to the individual assessments/appeals of the assessees. 5. The learned counsel for the assessees reiterated the facts and contended that as far as the BOI is concerned, the Department has not filed any appeal against the CIT(A) holding that the assessees shall be assessed in individual capacity on their respective shares. Therefore, this part of the controversy stands concluded. Now the two issues, which arise in the case of individual assessees, are: (i) Payment of Rs. 6 lakhs each to sister for vacating the premises; and (ii) Claim of exemption under s. 54. The learned counsel on first issue contended that in the will dt. 3rd Dec., 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made. After this money was given to her, she purchased a flat at Versova and shifted there in 1995. 6. In fine, the learned counsel contended that Miss Usha had legal rights in the property, which were capable of creating complication; the assessees had to sell the property with vacant possession, which could have been defeated resulting into complications. Therefore, the payment of Rs. 18 lakhs to her was for proper reason and allowable. The CIT(A) held that this amount can be at best treated as application of income and a gratuitous payment out of the capital gains that exclusively accrued to the assessees. The CIT(A) has mainly relied on the will of Shri Babaji Bolinjkar and held that she cannot approbate and reprobate at once the will of her deceased father. The CIT(A) has held that Miss Usha by affidavit before the High Court accepted the terms of the probate. The learned counsel contended that the Courts have held that in a family settlement even if one party has no right in it, to settle the dispute between the family members, amount paid to the party to relinquish right and title cannot be treated as gift [Kale vs. Dy. Director of Consolidation AIR 1976 SC 807, and CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14th May, 1993, a supplementary agreement was made on 4th Dec., 1993 providing for purchase of three flats by the two assessees and their brother in the new building proposed to be constructed on this plot of land and the purchase price of three flats of Rs. 36,40,000 was to be adjusted out of the balance sale consideration of Rs. 67,55,000. Three separate agreements were entered into by three brothers with the purchaser of property in this behalf. The CIT(A) held that the AO has not examined this important aspect of exemption in the assessment order. The CIT(A) held that even the plans of proposed new building were not approved by BMC on the date of agreement. The agreement executed by the assessees with the builder purchaser dt. 4th Dec., 1993, does not give specific allotment of flat, which mentions merely a flat on 2nd floor admeasuring 310 sq. ft. There is nothing in the agreement to establish that the assessees acquired a domain over the flats as they did not get specific flat. He held that there was no formal agreement for purchase of flat and conditions stipulated in s. 54 were not satisfied and the assessees did not deposit the money in capital gain account scheme; the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beginning she was residing with other family members in this house and the period of stay is more than 12 years. Under these circumstances, there is a possibility that she could have claimed right on property by way of adverse possession in case of a dispute. Her stay in the house is not doubted. The assessees agreed to sell the house with a condition that the same could be sold in vacant possession. The will of Shri Babaji Bolinjkar was not probated; to effect the sale, the same was necessary. The brothers anticipated the situation and a family settlement was arrived at on 10th April, 1993 providing that Miss Usha Bolinjkar could be given Rs. 18 lakhs out of the sale proceeds of the house being sold for vacating peaceful possession of the portion of the premises occupied by her. The veracity of the family settlement is not disputed. As the facts emerge, Miss Usha Bolinjkar subsequently bought another flat at Versova out of this money and shifted there. After family settlement, probate was applied in the course of which Miss Usha signed an affidavit agreeing to the terms of probate according to will. The swearing of affidavit on the part of Miss Usha cannot be questioned as she had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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