Capital Gains - Urgent
This query is : Resolved
04 January 2008
Facts of the case:-
1) "J" is an HUF as on 31/10/1978 engaged into trading of onions; which is partitioned on that date and existing immovable properties were maintained in the HUF; cash being distributed between J,(Mother) R, S and C(Sons){All unmarried sons}. There is no cash in hand as on that day with HUF.
2) On 1/11/1978 a partnership was entered into by R, S and C (Sons) for carrying out the business which was originally HUF business prior to this date.
3) On 28/04/1980 agri land was purchased in the name of Mr. R and S for Rs. 33000/- (within city limits)However, the sources of funds are not properly accounted for at that period.
4) The partnership was dissolved 31/03/1989 and consequently Mr. R and S are not filing their returns since they have no taxable income and have no PAN also.
5) Today, the land is to be sold and the proceeds are to be distributed among the brothers. Expected sales value is Rs. 3 Crore.
6) The question is how to account for the share to be given to Mr. C who is not owner of the land however, who has claimed his share since in his opinion the land is acquired out of the proceds generated through common source and hence he is entitled to the share of sale proceeds; all brothers have agreed to it.
What treatment is to be given for I.T. Purpose.
1) "J" is an HUF as on 31/10/1978 engaged into trading of onions; which is partitioned on that date and existing immovable properties were maintained in the HUF; cash being distributed between J,(Mother) R, S and C(Sons){All unmarried sons}. There is no cash in hand as on that day with HUF.
2) On 1/11/1978 a partnership was entered into by R, S and C (Sons) for carrying out the business which was originally HUF business prior to this date.
3) On 28/04/1980 agri land was purchased in the name of Mr. R and S for Rs. 33000/- (within city limits)However, the sources of funds are not properly accounted for at that period.
4) The partnership was dissolved 31/03/1989 and consequently Mr. R and S are not filing their returns since they have no taxable income and have no PAN also.
5) Today, the land is to be sold and the proceeds are to be distributed among the brothers. Expected sales value is Rs. 3 Crore.
6) The question is how to account for the share to be given to Mr. C who is not owner of the land however, who has claimed his share since in his opinion the land is acquired out of the proceds generated through common source and hence he is entitled to the share of sale proceeds; all brothers have agreed to it.
What treatment is to be given for I.T. Purpose.
07 January 2008
The first thing is this if you want to claim that new land was purchased out of the corpus of the HUF , you have to prove it . Please clarify is such evidence is availble??
2nd issue to be clarified is wether order u/s 171 was passed by Income Tax Department recognising the partial partiton???
THE LEGAL OWNERS OF THE LAND CAN NOT BE CHANGED BY ORAL AGREEMENTS OR UNDERSTANDING
PLEASE CLARIFY AND EXPLAIN THE ABOVE FOR FURTHER REPLY
2nd issue to be clarified is wether order u/s 171 was passed by Income Tax Department recognising the partial partiton???
THE LEGAL OWNERS OF THE LAND CAN NOT BE CHANGED BY ORAL AGREEMENTS OR UNDERSTANDING
PLEASE CLARIFY AND EXPLAIN THE ABOVE FOR FURTHER REPLY
08 January 2008
First thanks for the reply,
As per the records available with the assessee no evidence of order u/s 171 being passed is found. Only paper available is acknowledgement of application submitted for this order to the department.
Secondly, there is no evidence of land being acquired through HUF corpus.
Now, if the third brother is to be given the share of sales proceeds, so that the family disputes to be resolved is it possible that both other brothers gift him 1/3 share of land and thereafter the sale is executed by all the three.
Is, there any other legally tenable and practically possible as well as tax beneficial solution available.
As per the records available with the assessee no evidence of order u/s 171 being passed is found. Only paper available is acknowledgement of application submitted for this order to the department.
Secondly, there is no evidence of land being acquired through HUF corpus.
Now, if the third brother is to be given the share of sales proceeds, so that the family disputes to be resolved is it possible that both other brothers gift him 1/3 share of land and thereafter the sale is executed by all the three.
Is, there any other legally tenable and practically possible as well as tax beneficial solution available.
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