Case Law Details
P. P. Mahatme, POA Lorna Margaret Pinto Vs ACIT (Bombay High Court)
In so far as the second substantial question of law is concerned, it is necessary to note that the Assessing Officer, Commissioner of Income-tax (Appeals) and the ITAT have concurrently held that notwithstanding the nomenclature of the settlement, or the fact that the settlement is incorporated in the Consent Decree, the same is not a family settlement as such, the principle in Sachin Ambulkar (supra) is inapplicable. This means that the three authorities have basically returned a finding of fact that the settlement in this case, is not a family settlement as such, so as to regard the income derived therefrom by the Appellant as inexigible to capital gains tax.
The family settlement referred to in Sachin Ambulkar (supra) was a settlement amongst family members in the context of their ‘preexisting right’. In this context, the ITAT whose decision was questioned by the Revenue in the case of Sachin Ambulkar (supra), had held that since the settlement ‘only defines a preexisting joint interest as separate interests, there is no conveyance, if the arrangement is bonafide’. Since there is no conveyance, there is no need for registration of such arrangements, when orally made, even if later on reduced to writing. The ITAT, thereafter, followed the decision of the Hon’ble Apex Court in the case of Maturi Pullaiah vs. Maturi Narasinham, reported in AIR 1966 SC 1836 and held that where 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, such amount cannot be regarded as a capital gain and no capital gains tax liability arises.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
Heard Mr. Mihir Naniwadekar with Mr. Purushottam Karpe for the Appellant and Ms. Amira Razaq, Standing Counsel for the Respondent.
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