The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that immovable property received without consideration by the assessee, as per family settlement memorandum is taxable under section 56(2)(vii)(b)(i) of the Income Tax Act,1961.
Shri Subodh Ratnaparkhi appeared on behalf of the assessee and Shri Sardar Singh Meena appeared on behalf of the revenue.
The Revenue challenged the order of the CIT(A) – 2, Thane passed in ITA No. 10433/2017-18 involving proceeding u/s. 143(3) of the Income Tax Act, 1961 (Act) which deleted the addition under section 56(2)(vii)(b) of Rs.6,54,61,100/- made by the Assessing Officer in his assessment order dated 21.12.2017.
The respondent, Shri Pramod A. Thakur is a member of the Thakur family of Kharghar, Navi Mumbai. The grandfather of the respondent, Late Shri Giraya(Gira) Thakur owned and possessed agricultural lands at Mouje Kharghar, Taluka Panvel, Dist. Raigad.
Shri Arjun Gira Thakur, the father of the respondent, along with his brother and two sisters, being children of Late Shri Giraya Thakur entered into a development agreement with one, M/s Metro Reality for the development of the said plot of land. The members of the Thakur family under the scheme of development became entitled to certain constructed residential flats.
Shri Arjun Gira Thakur, father of the respondent under the said development agreement with M/s Metro Reality became entitled to 13 flats. Being aged, infirm and sick, he requested the developer to register the said 13 flats in the name of his son i.e the respondent. These facts are well documented, particularly in the Memorandum of Family Settlement dt.30.09.2012, whereby the allotment of the said 13 flats was transferred to the name of the respondent.
The AO assumed that the appellant has received 13 flats from M/s. Metro Reality without consideration and that the value of such flats being Rs.6,54,61,000/- was the deemed income of the respondent u/s.56(2)(vii)(b) of the I.T. Act, 1961.
A Coram of Shri S S Godara, J M and Shri Dr Dipak P Ripote, AM viewed that Section 56(2)(vii)(b)(i) attracted only where any immovable property was received by the assessee, who was an individual or a HUF, without any consideration.
It was observed that the developer was not a party in the family settlement memorandum and the assessee has failed to show the clinching material inter alia indicating any arrangement between his father and developer wherein the former had parted with the land for getting developed area in lieu of consideration; which was passed on to him as a gift from the father.
The Tribunal held that the Assessing Officer had rightly made the impugned addition u/s. 56 (2)(vii)(b) of the act and the CIT(A) has erred in deleting the same. The revenue’s appeal was allowed.
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