Compensation to son for giving up rights in father’s properties from mother non-taxable u/s 45: ITAT
- Blog|Income Tax|News|
- 107 Views
- 2 Min Read
- By Taxmann
- Last Updated on 4 May, 2022
Judiciary and Counsel Details
- N. V. Vasudevan, Vice-President and B.R. Baskaran, Accountant Member
- Sankar Ganesh K., JCIT (DR) for the Respondent.
Facts of the Case
The assessee was the son of K. K. Vijayakumar. The assessee’s Grandfather had purchased the property through a Registered Sale Deed and by his will, bequeathed the said property to his father.
Apart from the aforesaid property, the assessee’s father was also absolute owner of three shops and a building. By his last will, he bequeathed all the aforesaid properties to his wife absolutely.
After the demise of assessee’s father, the assessee filed a suit for partition and separate possession of his share of the properties belonging to his father. The parties to the suit viz., the assessee, his brother, and his mother signed an agreement, whereby it was agreed that the assessee would be paid a sum of Rs. 1.60 crores and allotted one shop as full and final settlement. The assessee gave up all his rights to any of the other suit schedule properties. A decree was passed in terms of the comprised agreement between the parties.
During the assessment, the Assessing Officer (AO) held that sum of Rs. 1.60 crores received by the assessee from his mother was in the nature of income chargeable to tax. On appeal, the Commissioner (Appeals) also uphold the order of AO. Aggrieved-assessee filed the instant appeal before the Tribunal.
The Tribunal held that the assessee received the sum of Rs. 1.60 Crores for giving up his rights over some of the items of the suit properties. The fact that all the items of suit properties were bequeathed to the assessee’s mother under the will of the father cannot be the basis to hold that the assessee did not have any rights whatsoever.
The assessee had a right to question the validity of the will and had filed the suit for partition and separate possession of his share of the suit properties. Thus, the sum received by the assessee was capital receipt not chargeable to tax and cannot be brought to tax as capital gain under section 45.
- Smt. T. Gayathri v. ITO  47 taxmann.com 190/150 ITD 48 (Bang. – Trib.) (para 9) followed.
List of Cases Referred to
- Smt. T. Gayathri v. ITO  47 taxmann.com 190/150 ITD 48 (Bang. – Trib.) (para 9).
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied