Please clarify
“A”, “B” & “C” are three brothers. They have 3 immovable properties (D,E & F) under joint family. They move to court for partition. Court valued the property as follows:
Property D Rs. 55 lakhs
Property E Rs. 40 Lakhs
Property F Rs. 40 Lakhs
Total Property Value Rs. 135 Lakhs (Each will get Rs. 45 Lakhs as per court valuation)
“A” received property D and liable to pay Rs. 5 Lakhs each share to “B” & “C”.
“B” received property E and will also receive Rs.5 Lakhs from “A”
“C” received property F and will also receive Rs.5 Lakhs from “A”.
But “A” refuse to pay Rs. 10 Lakhs to “B” & “C” in front of court, so court decided to auction the property D and from auctioned amount of Rs. 50 Lakhs court directed the purchaser to pay Rs. 5 lakhs each share to “B” & “C” and the remaining balance to “A”.
Now the question is
1) Do capital gain on sale of immovable property D through court will arise?
2) If yes , who will bear the Capital Gain Tax?
When you will see the Definition of Transfer u/s 2(47) there is clearly coverer every kind of sale, exchange, relinquishment etc of the Capital Assets and Nothing has been said about the status of Transferor. So In my opinion:
1. Capital Gain shall be arise even if it is being sold by court in the procedure of settlement.
2. The Capital Gain Tax amount should be set aside by court from the sale Consideration and balance shall be Divided between the brothers.
Other suggestion are highly appreciated.
CAclubindia
