The ITO, Ward-1(1), Bhavnagar v. Smt. Chetanben Manmohanbhai Tamboli(HUF), Bhavnagar

ITA 2669/AHD/2007 | 2004-2005
Pronouncement Date: 22-02-2010 | Result: Dismissed

Appeal Details

RSA Number 266920514 RSA 2007
Assessee PAN AAAHT4391R
Bench Ahmedabad
Appeal Number ITA 2669/AHD/2007
Duration Of Justice 2 year(s) 8 month(s) 7 day(s)
Appellant The ITO, Ward-1(1), Bhavnagar
Respondent Smt. Chetanben Manmohanbhai Tamboli(HUF), Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 22-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 22-02-2010
Date Of Final Hearing 15-02-2010
Next Hearing Date 15-02-2010
Assessment Year 2004-2005
Appeal Filed On 15-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI D.C. AGRAWAL A.M.) I.T.A. NO. 2668/AHD./2007 ASSESSMENT YEAR : 2004-2005 INCOME TAX OFFICER WARD-1(1) BHAVNAGAR VS.- SHRI MANMOHANBHAI F. TAMBOLI (HUF) BHAVNAGAR (PAN : AAAHT 4391 R) (APPELLANT) (RESPONDENT) & I.T.A. NO. 2669/AHD./2007 ASSESSMENT YEAR : 2004-2005 INCOME TAX OFFICER WARD-1(1) VS.- SHRI CHETANBH AI MANMOHANBHAI F. TAMBOLI (HUF) BHAVNAGAR BHAVNAGAR (PAN : AAAHT 43 25 H) (APPELLANT) (RESPONDENT) & I.T.A. NO. 2670/AHD./2007 ASSESSMENT YEAR : 2004-2005 INCOME TAX OFFICER WARD-1(1) VS.- SMT. HANSABEN M. TAMBOLIBOLI BHAVNAGAR BHAVNAGAR (PAN : AAFPT 9511 H) (APPELLANT) (RESPONDENT) ASSESSEES BY : SHRI S.N. SOPARKAR A ND SMT. URVASHI SHODHAN DEPARTMENT BY : SMT. NEETA SHAH SR. D .R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THESE THREE APPEALS FILED BY THE DIFFERENT ASSESSE ES ARE AGAINST THE THREE SEPARATE ORDERS ALL DATED 05.03.2007 OF LEARNED COMMISSIONER OF INC OME TAX(APPEALS)-XIX AHMEDABAD FOR THE SAME ASSESSMENT YEAR 2004-05. 2. THE FACTS IN BRIEF ARE THAT ALL THE THREE ASSESS EES WERE HOLDING SHARES OF INVESTMENT & PRECISION CASTINGS LTD. (IPCL) AND THE SAME HAVE BE EN TRANSFERRED TO IFT GROUP (INDUBHAI F. TAMBOLI FAMILY GROUP) AT THE RATE OF RS.143.25 FOR EACH SHARE. HOWEVER ALL THE THREE ASSESSEES HAD NOT SHOWN CAPITAL GAIN ON TRANSFER OF SAID SHAR ES. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER CONCLUDED THAT THE TRANSACTION OF TRANSFER OF SHARES OF IPCL COME WITHIN THE PURVIEW OF 2 ITA NOS. 2668-2670/AHD/ 2007 CAPITAL GAIN UNDER SECTION 45 READ WITH SECTION 2(4 7) OF THE INCOME TAX ACT AND HAVING NOT BEEN SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THE SALE CONSIDERATION OF THE SHARES AMOUNTING TO RS.33 80 700/- IN CASE OF SHRI MANMOHANBHAI F. TAMB OLI (HUF) RS.23 20 650/- IN CASE OF SHRI CHETANBHAI MANMOHANBHAI TAMBOLI HUF AND RS.36 38 55 0/- IN CASE OF HANSABEN M. TAMBOLI HAD BEEN BROUGHT TO TAX AFTER ALLOWING THE COST PRI CE OF THE SHARES. THE ASSESSING OFFICER COMPUTED THE CAPITAL GAIN AND BROUGHT TO TAX AS LON G-TERM CAPITAL GAIN IN RESPECT OF THE ASSESSEES WHICH READS AS UNDER :- SHRI MANMOHANBHAI F. TAMBOLI (HUF) RS.29 85 810/- CHETANBHAI MANMOHANBHAI TAMBOLI HUF RS.18 39 150/- HANSABEN M. TAMBOLI RS.33 83 550/- BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) IT WAS CONTENDED THAT VARIOUS ASSESSEES AND OTHER MEMBERS OF THEIR FAMILY AND MFT GROUP WERE THE PROMOTERS OF TWO COMPANIES NAMELY (I) INVESTMENT & PRECISION CASTING LTD. (IPCL) AND (II) STEEL CAST LTD. (SCL). THESE TWO COMPANIES WERE BEING MANAGED BY THE GROUP S WITH S/SHRI I.F. TAMBOLI (IFT)_ BIPIN F. TAMBOLI (BFT) AND M.F. TAMBOLI (MFT) GROUP. THER E WERE DISPUTES BETWEEN THESE GROUPS AND THE MATTER HAD GONE TO THE LITIGATION BEFORE TH E COURT. THE MATTER WAS REFERRED TO SHRI P.N. BHAGWATI RETIRED CHIEF JUSTICE OF INDIA WHO WAS A PPOINTED AS SOLE ARBITRATOR. THE MATTER WAS ULTIMATELY RESOLVED AS PER THE AWARD. THE MFT GROUP HAD TO HANDOVER THE SHARES OF IPCL TO IFT GROUP AT A PRICE FIXED IN THE AWARD. SIMILARLY THE IFT GROUP HAD TO HANDOVER THE SHARES OF SCL TO MFT GROUP AT A PRICE FIXED IN THE AWARD. ALL THE TH REE ASSESSEES RECEIVED SOME AMOUNT FOR HANDING OVER THE SHARES OF IPCL AND NOT LIABLE TO T AX AS CAPITAL GAIN TAX IN VIEW OF THE FACT THAT THE AMOUNT WAS RECEIVED UNDER THE FAMILY ARRANGEMEN T AND HAD THEREFORE CLAIMED AS EXEMPT. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON'BLE ITAT CHANNAI BENCH D IN THE CASE OF KAY ARR ENTERPRISES [97 ITD 291 (MAD.)]. IT WAS SUBMITTED THAT THE SAID DECISIO N OF THE ITAT WAS BASED ON THE RATIO LAID DOWN BY THE HON'BLE MADRAS HIGH COURT IN THE CASE O F AL RAMANATHAN [245 ITR 494]. IT WAS ALSO SUBMITTED THAT THE RATIO LAID DOWN BY THE HON' BLE MADRAS HIGH COURT WAS BASED ON THE HON'BLE APEX COURTS JUDGMENT IN THE CASE OF KALE VS.- DY. DIRECTOR OF CONSOLIDATION 1976 AIR 807. 3 ITA NOS. 2668-2670/AHD/ 2007 3. AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD THAT FAMIL Y ARRANGEMENT MADE AMONG THE FAMILY MEMBERS WOULD NOT AMOUNT TO TRANSFER. THE REASONS G IVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ARE IDENTICAL IN ALL THE THREE CASES. FOR THE SAKE OF CONVENIENCE THE REASONS GIVEN IN THE CASE OF SHRI CHETANBHAI MANMOHANBHAI T AMBOLI (HUF) ARE AS UNDER :- 5.4. I HAVE GONE THROUGH THE AGREEMENTS MADE BETWE EN BOTH THE GROUPS FOR SETTLEMENT OF DISPUTE THROUGH ARBITRATOR . I HAVE CAREFULLY CONSIDERED THE AWARD PASSED BY THE ARBITRATOR. AFTE R CONSIDERING THE OVERALL FACTS I HAVE NO HESITATION TO HOLD THE WHO LE TRANSACTIONS CARRIED OUT TO SETTLE THE FAMILY DISPUTE COME IN THE PURVIE W OF FAMILY ARRANGEMENT. THE TRANSACTIONS EFFECTED IN VIEW OF F AMILY ARRANGEMENTS AMONG THE FAMILY MEMBERS WOULD NOT AMOUNT TO TRANSF ER. FAMILY ARRANGEMENTS ARE GOVERNED BY PRINCIPLES WHICH ARE N OT APPLICABLE TO DEALINGS BETWEEN STRANGERS AND THE FAMILY ARRANGEME NT AMONG THEM IS FOR THE INTEREST OF THE FAMILY FOR THE HARMONIOUS WAY OF LIVING. IT HAS BEEN DECIDED BY VARIOUS JUDICIAL COURTS THAT THE TR ANSACTIONS BY WAY OF EFFECTING FAMILY ARRANGEMENT AMONG THE FAMILY MEMBE RS WOULD NOT AMOUNT TO TRANSFER. HON'BLE SUPREME COURT IN THE CA SE OF MATURI PULLAIAH VS. MATURI NARASIMHAM AIR 1966 SC 1836 HAS OBSERVED THAT MEMBERS OF A JOINT HINDU FAMILY MAY TO MAINTAIN P EACE OR TO BRING ABOUT HARMONY IN THE FAMILY ENTER INTO SUCH A FAMI LY ARRANGEMENTS. IF SUCH AN ARRANGEMENT IS ENTERED INTO BONAFIDE AND TH E TERMS THEREOF ARE FAIR IN THE CIRCUMSTANCES OF A PARTICULAR CASE COU RTS WILL MORE READILY GIVEN ASSENT TO SUCH AN ARRANGEMENT THAN TO AVOID I T. HON'BLE SUPREME COURT IN THE CASE OF KALE VS.- DY. DIRECTOR OF CON SOLIDATION 1976 AIR 807 HAS LAID DOWN THE PROPOSITIONS WHICH ARE THE ES SENTIALS OF A FAMILY ARRANGEMENT. THE SAME ARE REPRODUCED FOR READY REFE RENCE : (I) THE FAMILY SETTLEMENT MUST BE A BONA FIDE ONE SO AS TO RESOLVE FAMILY DISPUTES AND RIVAL CLAIMS BY A FAIR AND EQUI TABLE DIVISIONS OR ALLOTMENT OF PROPERTIES BETWEEN THE VA RIOUS MEMBERS OF THE FAMILY. (II) THE SAID SETTLEMENT MUST BE VOLUNTARY AND SHOULD NO T BE INDUCED BY FRAUD COERCION OR UNDUE INFLUENCE. IN THE PRESENT CASE BOTH THE ABOVE INGREDIENTS FOR FAMILY ARRANGEMENTS ARE AVAILABLE AND APPEAR TO BE A BONA FIDE ONE INAS MUCH AS IT HAS BEEN SHOWN TO HAVE BEEN MADE VOLUNTARY AND NOT INDUCED B Y FRAUD COERCION OR UNDUE INFLUENCE. FOLLOWING SAID PRINCIPLES LAID DOWN BY HON'BLE SUPREME COURT. HON'BLE MADRAS HIGH COURT IN THE CAS E OF CIT VS.- A.L. RAMANATHAN HAS HELD THAT : THE FAMILY ARRANGEMENT INVOLVED IN THIS CASE DOES NOT AMOUNT TO TRANSFER. THE TRIBUNAL IS PERFECTLY JUSTI FIED IN TAKING 4 ITA NOS. 2668-2670/AHD/ 2007 THE VIEW THAT THE TRANSACTION OF THE ASSESSEE BEING A FAMILY ARRANGEMENT DID NOT AMOUNT TO TRANSFER AND THEREFO RE THERE WAS NO CHARGEABLE CAPITAL GAIN ARISING FROM THE TRA NSACTION. SO THE TRANSACTION OF THE ASSESSEE DID NOT AMOUNT TO TRANSFER AND THERE WAS NO CHARGEABLE CAPITAL GAIN ARISING FR OM THAT TRANSACTION. IN VIEW OF THE ABOVE JUDICIAL RULINGS THE TRANSACT IONS MADE AMONG BOTH THE GROUPS IN THE PRESENT CASE COME IN THE PURVIEW OF FAMILY ARRANGEMENTS. THE SHARE OF IPCL HELD BY THE FAMILY MEMBERS OF MFT GROUP HAVE BEEN TRANSFERRED TO IFT GROUP AS PER THE DECISION OF ARBITRATOR. IT IS MERELY A FAMILY ARRANGEMENT MADE WITH INTENT TO MAINTAIN PEACE IN THE FAMILY AND PROSPERITY OF THE BUSINESS AND AS PER JUDICIAL RULINGS FAMILY ARRANGEMENT IS NOT COVERED U/S. 45 R.W.S. 2(47) OF THE INCOME TAX ACT. THEREFORE THE ACTION OF THE AS SESSING OFFICER IS NOT FOUND TO BE JUSTIFIED. THE FAMILY ARRANGEMENT MADE AMONG THE FAMILY MEMBERS WOULD NOT AMOUNT TO TRANSFER. THEREFORE NO CAPITAL GAIN ARISES. THE ASSESSING OFFICER IS THEREFORE DIRECT ED TO DELETE THE ADDITION OF RS.18 39 150/-. THIS GROUND OF APPEAL IS ALLOWED . 4. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE REVENUE ARE IN APPEALS BEFORE US ON THE GROUND THAT THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETING THE ADDITION OF RS.18 39 150/- IN CASE OF SHRI CHETANBHAI MANMOHANBHAI TAMBOLI (HUF) RS.29 85 810/- IN CASE OF SHRI MANMO HANBHAI FULCHANDBHAI TAMBOLI (HUF) AND RS.33 83 550/- IN CASE OF SMT. HANSABEN M. TAMB OLI WHICH WERE MADE BY THE A.O. ON ACCOUNT OF LONG-TERM CAPITAL GAIN ON TRANSFER OF SH ARES. 5. AT THE TIME OF HEARING ON BEHALF OF REVENUE SMT . NEETA SHAH SR. D.R. APPEARED AND CONTENDED THAT ALL THE THREE ASSESSEES WERE HOLDING SHARES OF IPCL WHICH WERE TRANSFERRED TO OTHER FAMILY GROUP FOR MONEY. THE TRANSACTION IS A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE INCOME TAX ACT AND TAXABLE UNDER SECTION 45 OF THE INCOME TAX ACT AS CAPITAL GAIN WHICH IS CORRECTLY WORKED OUT BY THE ASSESSING OFFICER AN D TAXED IN THE ASSESSMENT ORDER UNDER SECTION 45 OF THE INCOME TAX ACT AS LONG-TERM CAPITAL GAIN. THE LD. D.R. ALSO POINTED OUT THAT THERE IS A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE INCOME TAX ACT 1961 THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER BE RESTORED. SHE ALSO POINTED OUT THAT PIYUSH INDULAL TAMBOLI HUF(BIGGER) IS ALSO ASSESSED TO TAX AND IN THE RETU RN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 HAD SHOWN LONG-TERM CAPITAL LOSS OF RS.(-)69 884/- ON TRANSFER OF SHARES OF SCL TO MFT GROUP. THIS CAPITAL LOSS OF RS.69 884/- WAS SETTLED AGAINS T THE PROFIT ARISING ON TRANSFER OF BONUS SHARES 5 ITA NOS. 2668-2670/AHD/ 2007 OF SCL GROUP TO MFT GROUP. SHE SUBMITTED THAT SIMIL AR TRANSACTION HAD BEEN SHOWN BY ONE OF THE GROUPS AS CAPITAL GAIN FOR REALIZATION OF TRANS FER OF SHARES THEN WHY THE OTHER GROUP I.E. CHETANBHAI MANMOHANBHAI TAMBOLI (HUF) HAS CLAIMED T HE SAME AS EXEMPT ON THE GROUND THAT IT IS NOT COVERED WITHIN THE MEANING OF SECTION 2(4 7) OF THE INCOME TAX ACT 1961. 5.1. THE LD. D.R. FURTHER SUBMITTED THAT A FAMILY A RRANGEMENT IS DONE WHERE MEMBERS OF A FAMILY WITH KNOWN RELATIONSHIP AND COMMON INTEREST IN THE FAMILY ARRANGEMENT AND FAMILY BUSINESS TRANSFERS THEIR INVESTMENTS. FURTHER IF S HARES ARE HELD BY INDEPENDENT ENTITIES AND OWNERSHIP RIGHTS EXERCISED AND THEREAFTER SHARES AR E TRANSFERRED IN AN ARRANGEMENT FOR TRANSFER OF BUSINESS INTEREST THEN IT WILL BE ONLY A BUSINESS ARRANGEMENT AND NOT FAMILY SETTLEMENT. FURTHER FAMILY ARRANGEMENT WOULD MEAN THAT ALL THE FAMILY M EMBERS HAD A JOINT AND SEVERAL INTERESTS IN THOSE ASSETS OR INVESTMENTS EVEN THOUGH THEY MIGHT HAVE BEEN HELD IN THE NAME OF INDIVIDUAL PERSON. ONCE DE FACTO OWNERSHIP IS COMMON AND JOINT OWNERSHIP THOUGH DE JURE OWNERSHIP IS INDEPENDENT OWNERSHIP IS MIXED AS DE FACTO-CUM- DE JURE OWNERSHIP THEN IT WILL BE A FAMILY ARRANGEMENT BUT WHERE ASSETS ARE HELD FROM THE VERY BEGINNING ITSELF INDEPENDENTLY DE FACTO AND DE JURE AND THEREAFTER THEY ARE TRANSFERRED FROM O NE OWNER TO ANOTHER OWNER THEN IT WILL ONLY BE A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF T HE INCOME TAX ACT AND NOT A TRANSFER AS FAMILY ARRANGEMENT. IN THE PRESENT CASE THE LD. D.R. SUBM ITTED THAT WHEN CONCERNED ENTITIES COULD NOT EXERCISE/ INDEPENDENT POWER ON THESE ASSETS AND NO CONSIDERATION IS PASSED ON TRANSFER ONLY THEN IT WOULD COME WITHIN THE AMBIT OF FAMILY ARRAN GEMENT BUT WHERE CONSIDERATION IS PASSED AFTER PROPER VALUATION OF SHARES I.E. TRANSFER WAS FOR CONSIDERATION AS IN KIND PLUS CASH THEN IT IS A SALE TO OTHER PARTIES AND NOT A TRANSFER OR RE-AL LOCATION OF OWNERSHIP IN FAMILY ARRANGEMENT. ACCORDING TO LD. D.R. A DISTINCTION SHOULD BE MADE BETWEEN FAMILY ARRANGEMENT AND BUSINESS ARRANGEMENT. IF BUSINESS ARRANGEMENT IS PRE-DOMINAN TLY HIGH AND FAMILY ARRANGEMENT IS CONSEQUENTIAL ONLY THEN CAPITAL GAINS WOULD BE LIA BLE ON SUCH TRANSFER. BUT WHERE FAMILY ARRANGEMENT IS PRE-DOMINANT AND BUSINESS ARRANGEMEN T IS CONSEQUENTIAL THEN IN THAT SITUATION ONLY CAPITAL GAIN MAY NOT BE LEVIED IN VIEW OF THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF KAY ARR ENTERPRISES (SUPRA) AS REFERRED TO THE ASSESSEE. THE PRESENT CASE IS NOT COVERED BY FACTS OF THE CASE OF KAY ARR ENTERPRISES . THERE FAMILY ARRANGEMENT WAS PRE- DOMINANT AND BUSINESS ARRANGEMENT WAS CONSEQUENTIAL BUT IN THE PRESENT CASE BUSINESS CONSIDERATION IN THE SHAPE OF TAKING OVER THE CONTR OL OF DIFFERENT BUSINESS ENTITIES WAS PRE- 6 ITA NOS. 2668-2670/AHD/ 2007 DOMINANT AND IT WAS LIKE AN INDEPENDENT BUSINESSMAN S DECISION WHEREBY CONTROL OVER THE COMPANIES WAS TRANSFERRED FROM ONE PERSON TO ANOTHE R PERSON. EVEN THOUGH THESE WERE TECHNICALLY ONLY RELATED FAMILY MEMBERS OTHERWISE T HERE WAS NOTHING IN COMMON SUCH AS COMMON EXERCISE OF POWER OVER THE SHARES HELD BY ON E ENTITY WHICH WAS SUBSEQUENTLY TRANSFERRED TO ANOTHER ENTITY. 6. ON THE OTHER HAND SHRI S.N. SOPARKAR ALONGWITH SMT. URVASHI SHODHN APPEARING ON BEHALF OF THE ASSESSEE FILED A PAPER BOOK CONTAININ G 40 PAGES WHICH INTER ALIA INCLUDE THE FOLLOWING PARTICULARS :- SR. NO. PARTICULARS PAGES 1. SUBMISSIONS BEFORE CIT.(A)-XIX AHMEDABAD 1-6 2. ARBITRATION AWARD BY SHRI P.N. BHAGWATI IN THE CASE OF INDUBHAI F. TAMBOLI & FAMILY AND MANMOHANBHAI F. TAMBOLI & FAMILY (I) MINUTES OF THE ARBITRATION MEETING HELD ON 06.05.2003 (II) MINUTES OF THE ARBITRATION MEETING HELD ON 12.05.2003 (III) MINUTES OF THE ARBITRATION MEETING HELD ON 15.05.2003. (IV) AWARD 07-08 09-10 11-12 13-19 3. GENERAL AGREEMENT BETWEEN SHRI INDUBHAI F. TAMBOLI & FAMILY SHRI BIPINBHAI F. TAMBOLI & FAMILY AND SHRI MANMOHANBHAI F. TAMBOLI & FAMILY ALONGWITH NECESSARY DOCUMENTS 20-38 4. LETTER TO ITO (OSD) RANGE-1 BHAVNAGAR DATED 13.11.2006 39-40 THE LD. COUNSEL OF THE ASSESSEE IN SUPPORT OF EACH AND EVERY DOCUMENTS FURNISHED BEFORE US AS CONTAINED IN THE PAPER BOOK CONTENDED THAT THE FACT S OF THE PRESENT CASE ARE IDENTICAL WITH THAT OF THE DECISION OF THE HON'BLE ITAT CHENNAI BENCH D IN THE CASE OF KAY ARR ENTERPRISE REPORTED IN 97 ITD 291 (MAD.) WHEREIN IT WAS HELD THAT REARRANGEMENT OF SHAREHOLDINGS IN COMPANIES BY WAY OF FAMILY ARRANGEMENT TO AVOID POS SIBLE LITIGATION AMONG FAMILY MEMBERS AND TO CONTROL COMPANIES EFFECTIVELY BY MAJOR SHAREHOLD ERS COULD BE HELD AS A TRANSFER WITHIN THE MEANING OF SECTION 2(47) WHICH IS EXIGIBLE TO CAPI TAL GAINS TAX. THE LD. COUNSEL POINTED OUT THAT THE VIEW TAKEN BY THE HON'BLE ITAT CHENNAI IN THE CASE OF KAY ARR ENTERPRISES (SUPRA) IS 7 ITA NOS. 2668-2670/AHD/ 2007 ALSO UPHELD BY THE HON'BLE MADRAS HIGH COURT AS REP ORTED IN [2008] 299 ITR PAGE 348 (MAD.). THE HEAD NOTES OF THE SAID JUDGMENT OF THE HON'BLE MADRAS HIGH COURT READS AS UNDER :- IT IS SETTLED LAW THAT WHEN PARTIES ENTER INTO A F AMILY ARRANGEMENT THE VALIDITY OF THE FAMILY ARRANGEMENT IS NOT TO BE JUD GED WITH REFERENCE TO WHETHER THE PARTIES WHO RAISED DISPUTES OR RIGHTS O R CLAIMED RIGHTS IN CERTAIN PROPERTIES HAD IN LAW ANY SUCH RIGHT OR NOT . 7. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTE D THAT THE HON'BLE ITAT AHMEDABAD A THIRD MEMBER BENCH IN THE CASE OF DR. K.M. SHAH VS .- ACIT REPORTED IN 90 ITD 1 (AHD.)(TM) HAS ALSO IN ACCORDANCE WITH THE MAJORITY VIEW HELD THAT IF IT IS A CASE OF BONA FIDE FAMILY ARRANGEMENT THEN THERE IS NO TRANSFER. THE LD. COUN SEL OF THE ASSESSEE ACCORDINGLY CONTENDED THAT IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) HAS GIVEN COGENT REASON THEREFORE THE VIEW TAKEN BY THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 8. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. IN TH E IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS HELD THAT THE TRANSACTIO NS MADE AMONG BOTH THE GROUPS IN THE PRESENT CASE COME IN THE PURVIEW OF FAMILY ARRANGEM ENTS. THE SHARE OF IPCL HELD BY THE FAMILY MEMBERS OF MFT GROUP HAVE BEEN TRANSFERRED TO IFT G ROUP AS PER THE DECISION OF ARBITRATOR. IT IS MERELY A FAMILY ARRANGEMENT MADE WITH INTENT TO MAI NTAIN PEACE IN THE FAMILY AND PROSPERITY OF THE BUSINESS AND AS PER JUDICIAL RULINGS FAMILY AR RANGEMENT IS NOT COVERED U/S. 45 READ WITH SECTION 2(47) OF THE INCOME TAX ACT. THEREFORE THE ACTION OF THE ASSESSING OFFICER IS NOT FOUND TO BE JUSTIFIED. THE FAMILY ARRANGEMENT MADE AMONG THE FAMILY MEMBERS WOULD NOT AMOUNT TO TRANSFER. THEREFORE NO CAPITAL GAIN ARISES THEREF ORE HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.18 39 150/-. THE FACTS OF THE PR ESENT CASE ARE IDENTICAL WITH THE DECISION OF THE ITAT CHENNAI IN THE CASE OF M/S. KAY ARR ENTERPRIS ES (SUPRA). THIS DECISION OF THE TRIBUNAL WAS AFFIRMED BY THE HON'BLE MADRAS HIGH COURT IN TH E CASE OF CIT VS.- KAY ARR ENTERPRISES [2008] 299 ITR 348. THE MADRAS HIGH COURT RELIED O N CIT VS.- R. PONNAMMAL [1987] 164 ITR 706/ [1986] 28 TAXMAN 26 (MAD.); CIT VS.- A. RAMAN ATHAN [2000] 245 ITR 494/ [2003] 128 TAXMAN 87 (MAD.); KALE VS.- DEPUTY DIRECTOR OF CON SOLIDATION AIR 1976 SC 807 AND MATURI 8 ITA NOS. 2668-2670/AHD/ 2007 PULLAIAH VS.- MATURI NARASIMHAM AIR 1966 SC 1836 W HILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. IT IS PERTINENT TO NOTE THAT ITAT CHENNAI BENCH I N THE CASE OF KAY ARR ENTERPRISES (SUPRA) HELD AS UNDER :- .THE WORD FAMILY IN THE CONTEXT OF A FAMILY ARR ANGEMENT IS NOT TO BE UNDERSTOOD IN A NARROW SENSE OF BEING A GROUP OF PE RSONS WHO ARE RECOGNIZED IN LAW S HAVING A RIGHT OF SUCCESSION OR HAVING A CLAIM TO A SHARE IN THE PROPERTY IN DISPUTE. IF IT IS SETTLED IN ONE BETWEEN NEAR RELATIONS THEN THE SETTLEMENT OF SUCH A DISPUTE CAN BE CONSIDERED AS A FAMILY ARRANGEMENT.. A COMPROMISE OR FAMILY ARRANG EMENT IS BASED ON THE ASSUMPTION THAT THERE IS AN ANTECEDENT TITLE OF SOME SORT IN THE PARTIES AND THE AGREEMENT ACKNOWLEDGES AND DEFINES WHAT THA T TITLE IS EACH PARTY RELINQUISHING ALL CLAIMS TO PROPERTY OTHER THAN THA T FALLING TO HIS SHARE AND RECOGNIZING THE RIGHT OF THE OTHERS AS THEY HAD PR EVIOUSLY ASSERTED IT TO THE PORTIONS ALLOTTED TO THEM RESPECTIVELY. THESE OBSER VATIONS DO NOT MEAN THAT SOME TITLE MUST EXIST AS A FACT IN THE PERSONS ENTE RING INTO A FAMILY ARRANGEMENT. THEY SIMPLY MEAN THAT IT IS TO BE ASSU MED THAT THE PARTIES TO THE ARRANGEMENT HAD AN ANTECEDENT. IT IS ALSO TO BE NOTED THAT A FAMILY ARRANGEMENT BY WHICH THE PROPERTY IS EQUITABLY DIVI DED BETWEEN THE VARI0OUS CONTENDERS SO AS TO ACHIEVE AN EQUAL DISTR IBUTION OF WEALTH INSTEAD OF CONCENTRATING THE SAME IN THE HANDS OF A FEW IS UNDOUBTEDLY A MILESTONE IN THE ADMINISTRATION OF SOCIAL JUSTICE. THAT IS WHY THE TERM FAMILY HAS TO BE UNDERSTOOD IN A WIDER SENSE SO AS TO INCLUDE WITHIN ITS FOLD NOT ONLY CLOSE RELATIONS OR LEGAL HEIRS BUT EVEN TH OSE PERSONS WHO MAY HAVE SOME SORT OF ANTECEDENT TITLE A SEMBLANCE OF A CLA IM OR EVEN IF THEY HAVE A SPES SUCCESSION IS SO THAT FUTURE DISPUTES ARE SEAL ED FOR EVER AND THE FAMILY INSTEAD OF FIGHTING CLAIMS INTER SE AND WASTING TIM E MONEY AND ENERGY ON SUCH FRUITLESS OR FUTILE LITIGATION IS ALE TO DEVOT E ITS ATTENTION TO MORE CONSTRUCTIVE WORK IN THE LARGER INTEREST OF THE COU NTRY (P. 303) IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS FOLLOWED THE DECISION OF THE ITAT CHENNAI BENCH IN THE CASE OF KAY ARR ENTERPRISES (SUPRA) AND THE LD. D.R. COULD NOT CONVINCED US IN WHAT RESPECT THE SAI D DECISION OF THE ITAT CHENNAI BENCH IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEE. IN OUR OPI NION THE FACTS ARE ALMOST IDENTICAL THEREFORE TH E LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS GIV EN COGENT REASON FOR HOLDING THAT ALL THE THREE ASSESSEES ARE NOT LIABLE TO CAPITAL GAINS TAX UNDER SECTION 45 READ WITH SECTION 2(47) OF THE INCOME TAX ACT 1961 BECAUSE NO TRANSACTION OF TRAN SFER OF SHARES IS INVOLVED AS IT IS A CASE OF BONA FIDE FAMILY ARRANGEMENT. WE THEREFORE INCLIN E TO UPHOLD THE ORDER OF LEARNED 9 ITA NOS. 2668-2670/AHD/ 2007 COMMISSIONER OF INCOME TAX(APPEALS) AND REJECT THE GROUND IN RESPECT OF ALL THE APPEALS FILED BY THE REVENUE. 9. IN THE RESULT ALL THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 22.02.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22/ 02 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DE PUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.