Immovable Property received without consideration is liable to be taxed : ITAT

Immovable Property received without consideration is liable to be taxed : ITAT

The tribunal maintained that the revenue department rightly made the impugned addition

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.

The revenue department challenged the order of the Commissioner of Income Tax (Appeals), which deleted the addition of Rs.6,54,61,100 made by the assessing officer (AO) in the December 2017 assessment order.

The respondent, Pramod A. Thakur is a member of the Thakur family of Kharghar, Navi Mumbai. His grandfather, Giraya Gira Thakur owned and possessed agricultural lands at Mouje Kharghar, Taluka Panvel in the Raigad district. The respondent's father Arjun Gira Thakur, along with his brother and two sisters, entered into a development agreement with Metro Reality for the development of the plot of land.

Under the scheme, the members of the Thakur family were entitled to certain constructed residential flats. While Arjun Gira Thakur was entitled to 13 flats, being aged, infirm and sick, he requested the developer to register the flats in the name of the respondent, his son.

The facts were well-documented in the 30 September 2012 Memorandum of Family Settlement, whereby the allotment of the 13 flats was transferred in the name of the respondent.

The AO assumed that the appellant received the flats from Metro Reality without consideration. Thus, Rs.6,54,61,00, the value of the flats, was deemed income of the respondent under the IT Act.

The Coram of S S Godara (judicial member) and Dr Dipak P Ripote (accountant member) viewed that the Act 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 to the family settlement memorandum. Also, the assessee 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 the developed area in lieu of the consideration; which was passed on to him as a gift from his father.

Thus, allowing the appeal of the revenue department, the tribunal held that the AO rightly made the impugned addition, but the CIT(A) erred in deleting it.