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Commissioner of Income-tax Vs. C.V. Soundararajan and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberT.C.P. Nos. 265 of 1982 and 128 of 1983
Judge
Reported in[1984]150ITR80(Mad)
ActsIncome Tax Act, 1961 - Sections 48
AppellantCommissioner of Income-tax
RespondentC.V. Soundararajan and anr.
Appellant AdvocateA.N. Rangaswami, Adv.
Respondent AdvocateS.V. Subramaniam, Adv.
Excerpt:
- .....three brothers under a partition deed dated november 27, 1955. the said partition deed conferred a right of residence in the property in favour of the mother. the assessees in both the cases claimed a deduction of rs. 60,000 which they had paid to their mother for relinquishing her right of residence in the property sold, on the ground that for acquiring full transferable title in the property, they had to obtain a relinquishment from their mother of her right of residence, therein, as otherwise the property could not be sold for a fair and reasonable price if the right of residence in favour of their mother was subsisting. the deduction of rs. 60,000 claimed was allowed by the ito. however, the commissioner, in exercise of his suo motu revisional power, directed the ito to set aside the.....
Judgment:

Ramanujam, J.

1. The respondent in T.C.P. No. 128 of 1983 and the respondent in T.C.P. No. 265 of 1982 are brothers. They along with another sold a property which is an extent of 65 cents with a building for a consideration of Rs. 3,09,000. The said property had been allotted to all the three brothers under a partition deed dated November 27, 1955. The said partition deed conferred a right of residence in the property in favour of the mother. The assessees in both the cases claimed a deduction of Rs. 60,000 which they had paid to their mother for relinquishing her right of residence in the property sold, on the ground that for acquiring full transferable title in the property, they had to obtain a relinquishment from their mother of her right of residence, therein, as otherwise the property could not be sold for a fair and reasonable price if the right of residence in favour of their mother was subsisting. The deduction of Rs. 60,000 claimed was allowed by the ITO. However, the Commissioner, in exercise of his suo motu revisional power, directed the ITO to set aside the order giving deduction. Aggrieved by the said order of the Commissioner, the assessees went before the Income-tax Appellate Tribunal. The Tribunal held that the money received by the mother was for extinguishment of her right of residence in the property and that could not be taken into the computation of capital gains by the assessees. Whether, it is called 'deduction' or not, it is only a case of exclusion and, therefore, the said amount cannot be taken as consideration of the assessees for deduction of Rs. 60,000 which had been admittedly paid to their mother. Aggrieved by the order of the Tribunal, the Revenue seeks a direction from this court to the Income-tax Appellate Tribunal to refer the following questions to this court for is opinion :

T.C.P. No. 128 of 1983 :

'Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the reopening of the assessment under s. 147(b) was not valid, since the reopening was attempted only on a change of opinion ?'

T.C.P. No. 265 of 1982 :

'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in canceling the order of the Commissioner of Income-tax under section 263 by which the latter had merely directed the Income-tax Officer to redo the assessment in accordance with law after considering the points discussed in his order ?'

Common to T.C. Ps. Nos. 128 of 83 & 265 of 1982 :

'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the sum of Rs. 60,000 paid to the mother of the assessee, Smt. Punnialakshmi Ammal, was for relinquishment of her right in the property sold and hence in computing the capital gains arising out of the sale of the property, the sum of Rs. 60,000 should be deducted ?'

2. In this case, it is not in dispute that under the partition deed the mother had a right of residence in the house till her lifetime. It is also not in dispute that a sum of Rs. 60,000 has been paid to the mother for getting a relinquishment of her right of residence during her lifetime. In those circumstances, the question is, whether the sum of Rs. 60,000 paid to the mother can be taken as a part of the consideration received by the sons. Admittedly, the assessees received only Rs. 83,000 each and they did not have the benefit of Rs. 60,000 which in fact had been paid to the mother as consideration for relinquishing her life interest in the property. When the interest of the mother in the property in question had been purchased by getting a relinquishment for a consideration of Rs. 60,000, the said sum could not be taken to be consideration paid in respect of the interest on the assessee-sons. The payment made to the sons towards their interest in the property is only Rs. 83,000 each and that alone can be taken for the purpose of computation of the capital gains. Hence the Tribunal in this case appears to be right in its conclusion that the sum of Rs. 60,000 paid to the mother should be excluded.

3. We, therefore, see no justification to direct a reference in these cases. The reference petitions are accordingly rejected. There will be no order as to costs.


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