The Commissioner Of Income Taxmumbai v. Shri. Sachin P. Ambulkardadar (W), Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 6975 OF 2010 The Commissioner of Income TaxMumbai versus ..Appellant Shri. Sachin P. AmbulkarDadar (W), Mumbai ..Respondent -------- Mr. Vimal Gupta, Senior Counsel i/b Ms. Padma Diwakar for the Appellant.Mr. S.N. Inamdar, Senior Advocate with Mr.Mihir Naniwadekar with Mr. Atul K. Jasani for the Respondent. ............. CORAM : J.P. DEVADHAR & M.S.SANKLECHA, JJ. DATE : 16[th] October, 2012 P.C. :1 The questions of law raised by the Revenue in this appeal reads thus: (A)Whether the consideration received under the family settlement on transfer of right, title and interest in the family property is a transfer under Section 2(47) of the I.T.Act and liable to be taxed as Capital Gain under Section 45 of I.T.Act? (B) Whether on the facts and circumstances of the case and on true and proper interpretation of the family settlement dated 15[th] October, 2003theconsiderationof Rs.2,25,00,000/- received by the assessee on transfer of his right, title and interest in the family property to the party of the second part under family settlement is a Capital Gain liable to be taxed u/s. 45 of I.T.Act? 3 The ITAT in para 19 of its order has recorded thus: “19.We find that in the instant case there has been a genuine dispute among the family members and several suits were filed and judgements wre pronounced. Finally the parties to the suits decided to come to a settlement and the family arrangement was reached and a Consent Decree was passed by the Bombay High Court in Suit No. 4616 of 1998 on 16[th ]October, 2003. The Royalty paid by the Court Receiver was only an interim relief of their share of income from the properties of G.D.Ambulkar, which right arose on account of their pre-existing right in the properties as per Will of G.D. Ambulkar. Family arrangement is a device by which dispute between family members as to their respective property rights were settled. Such settlement may involve division of the property as between them and consequently a release of rights by one or the other in favour of the allottees. Conflicting legal claims get so settled. Since the settlement only defines a pre-existing joint interest as separate interests, there is no conveyance, if the arrangement is bonafied. Since there is no conveyance, there is no need for registration of such arrangements, when orally made, even if later reduced to writing.” 4The ITAT following the decision of the Apex Court in the case of Maturi Pullaiah and Anr. v. Maturi Narasinham and ors. reported in AIR 1966 (SC) 1836, held that there is no transfer of assets in the family arrangement and the amount received by the assessee is part of the family arrangement and not towards the transfer of any capital assets and hence no Capital Gains Tax liability arises. In our opinion, the decision of the ITAT is based on finding of facts, hence no question of law arises. Accordingly, the appeal is dismissed. (M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.)