The Commissioner Of Income Tax v. Shri.shirish S.maniar

bgp IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1222 OF 2007 The Commissioner of Income Tax,Vs.Shri.Shirish S.Maniar ..Appellant..Respondent Mr.P.Vyas a/w. P.S.Sahadevan for the Appellant.Mr.A.K.Jasani for the Respondent. CORAM :- DR.S.RADHAKRISHNAN &S.J.KATHAWALLA, JJ.DATE : 18TH JULY, 2008 P.C. 1.Heard the learned Counsel for the parties.The following two substantial questions are sought tobe raised by the Revenue:a. Whether in the facts and circumstances ofthe case and in law the Tribunal is right inholding that the transfer of the flat by theAssessee is under the family arrangement andtherefore the provisions of Section 2(47) ofthe Act are not attracted and hence the longterm capital gains is not attracted?b. Whether in the facts and circumstances ofthe case and in law the Tribunal is right indeleting the addition made under Section 68 ofthe Act?2.We have perused the judgment of the Tribunal dated 15th March,2007. In the said judgment, the Tribunal had, in detail considered as under: .We have heard rival submissions andconsidered them carefully. We have alsoperused the relevant materials on which ourattention was drawn. Copy of memorandum ofrecording terms of family arrangement isplaced on record. We noted that the familyarrangement was entered among various familymembers i.e. Shri.Shirish Shantilal Maniar,Sh Bhairavi Shirish Maniar, Harsh ShirishManiar and Jay Shirish Maniar. Therefore, itis not the case that this family arrangement was entered between the Assessee and his sonSh Harsh only as from the deed of the familyarrangement, it seen that the familyarrangement was not between the two but wasamong all the family members. We furthernoted that the only two properties i.e. theflat at Paddar Road and at Kandivali were notinvolved but many properties were involvedwhich were divided through the familyarrangement deed. There were business assetsand liabilities which were also dividedbetween the family members. As per the familyarrangement deed, the assets and liabilitiesincluding the properties were divided amongthe members. Nothing was brought on recordeither by the ld AO or by the ld CIT (A) toestablish that the family arrangement enteredamong the members was not acted upon actually.Without bringing any positive evidence ormaterial on record, presuming that the familyarrangement was not bonafide and it was acolourable device to save tax or to protectthe Paddar Road flat from RBI, in ourconsidered view was not correct and also notjustified. . We have also seen the decision of the Apex Court in the case of Ram Charan Das Vs.Girja Nandini Devi, AIR 1966 Supreme Court 323and found that ratio of this decision goes infavour of the Assessee. The Apex Court hasheld that "the consideration for such asettlement, if one may put it that way, is theexpectation that such settlement will resultin establishing or ensuring amity and goodwillamongst persons bearing relationship with oneanother. That consideration having passed byeach of the disputants the settlementconsisting of recognition of the rightasserted by each other cannot be impeachedthereafter." Therefore, in view of the abovefacts and the circumstances, we hold that thetransfer of assets under the familyarrangement does not attract the provisions ofsec.2(47) in the present case and therefore,Assessee is out of the mischief of Section 45.Accordingly, the ground of the Assessee isallowed on this issue. Since the provisionsof Section 45 does not attract in the facts ofthe present case, therefore, Section 50C isalso not applicable. is nothing erroneous or illegal in the said findings given by the Tribunal. 4.Similarly, with regard to second question of law, the Tribunal had observed, that; is nothing erroneous or illegal in the said findings given by the Tribunal. 4.Similarly, with regard to second question of law, the Tribunal had observed, that; Secondly, the addition cannot be made on thereasoning given by the AO because there is nodispute of liability of Rs.3,95,51,512/-towards M/s.Keynote Capitals Ltd. as on31/03/2003. This is clear from the letterreceived from M/s.Keynote Capitals Ltd.itself. M/s.Keynote Capitals Ltd. itself hascredited the ledger account of the Assessee byRs.2,28,04,334.64 by debiting the account ofM/s.Add Investments. The entry passed byM/s.Keynote Capitals Ltd. was without anyinstruction or without any concurrence by theAssessee. If a party on instruction of athird party disturbs its account or passes anyentry, no action can be taken against theperson whose account was credited or debitedeither in the eyes of law or on the facts.The Assessee has categorically stated throughits reply-dated 30th March,2006 that he doesnot understand that why M/s.Keynote CapitalsLtd. has passed such entry. Neither theAssessee has confirmed the action ofM/s.Keynote Capitals Ltd. nor it has givenhis concurrence, therefore, no action can betaken against the Assessee. Without goingfurther into details and in view of the factsand the circumstances of the case, we deletethe addition of Rs.2,28,04,334.64 made andconfirmed by the lower authorities.In the result, the appeal of the Assessee allowed. 5.Under the aforesaid facts and circumstances of the case, no substantial question of law involved in the above. Hence, the Appeal stands dismissed. (S.J.KATHAWALLA,J.) (DR.S.RADHAKRISHNAN,J.) is