Page 14 - DTPA Journal Aug 18

DTPA - J | 2017-18 | Volume 3 | August 2018

gave rise to any capital gains. However, the assessing registered can be used as piece of evidence. Subraya
authority held that there was a transfer, there was a M.N. V/s. Vitalla M.N. & Others - AIR 2016 S.C. 3236.
capital gain and, therefore, the assessee was liable to An oral partition of joint family property amongst
pay the tax. The Commissioner(Appeals) confirmed members of a HUF is permissible : AIR 1958 S.C. 706;
the order. The Tribunal held that there was no transfer AIR 1988 S.C. 881; 259-ITR-265 (S.C.)
and it was only a family arrangement. Therefore, the 15. Conclusion :
assessee was not liable to pay tax on capital gains. On
appeal to the High Court It was held : “A partition is Always a sincere attempt should be to resort to tax
not a transfer. What is recorded in a family settlement is management, so as to have large cash flow and expand
nothing but a partition. Every member has an enterior the trade and promote new industries. Each one of the
title to the property which is the subject-matter of a functionary should resolve to act for common good and
transaction, that is partition or a family arrangement. for the welfare of the citizens. It is high time that ways
So there is adjustment of shares, crystallization of the and means are evolved whereby honest and law
respective rights in family properties and, therefore, it abiding taxpayers are not put to inconvenience,
harassment and witch-hunting. The tax
cannot be construed as a transfer in the eye of law.
When there is no transfer there is no capital gains and administration need to be geared up to come up to
consequently no tax on capital gains is liable to be paid”. the expectations of the honest tax-payers. It is high
st
C.I.T. v. R. Nagaraja Rao (2013) 352-ITR-565 time that during 71 year of Independence, all
(Karnataka) at 566. citizens resolve to eliminate tax evasion and bring
glory to Bharat. Let each tax payer to pledge to pay
14. Family arrangement / settlement though not
the due taxes forthwith after due planning.

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