Transfer of capital assets by way of relinquishment

Transfer of capital assets by way of relinquishment under section 2(47) (i) of income tax act.
A relinquishment takes place when the owner withdrawals himself from the property and abandons his right thereto. The property continues to exist after relinquishment [CIT vs. Rashiklal Naneklal (HUF)(19987) 177 ITR 198].


For example Mrs. V inherited two third share in her mother’s share of one third share in a property. The other two owners of a property disputed the genuineness of the will and the rights of the assessee in the property. Ultimately Mrs. V relinquished her right, title and interest in the disputed property in favour of other co-owners for a cash consideration of Rupees 3,94,000. Relinquishment of right, title and interest in the disputed property was held to be transfer, thus giving rise to capital gain[CIT VS. Mrs.Vimla Lal(1983) 143 ITR 16.

Relinquishment of undivided interest by a member of HUF prior to partition is not transfer

Where a coparcener of an HUF relinquishes his interest in HUF property prior to partition, it does not amount to transfer. A coparcener has indeterminate share in the joint family property and becomes entitled to a definite share only after partition. In view of this relinquishment of such right prior to partition does not amount to transfer under section 2(47) for the purchase of computing capital gain under section 45 of income tax act.
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