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Ninth Income-tax Officer Vs. Mrs. Padma H. Koregaonkar. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIT APPEAL NO. 724 (BOM.) OF 1982 [ASSESSMENT YEAR 1976-77]
Reported in[1984]10ITD388(Mum)
AppellantNinth Income-tax Officer
RespondentMrs. Padma H. Koregaonkar.
Excerpt:
.....an authority like the tribunal, acting anywhere in the country, has to respect the law laid down by a high court, though a different state, so long as there was no contrary decision of any other high court on that question......assessee appealed before the commissioner (appeals.). the commissioner (appeals) referred to the gujarat high court decisions in the cases of cit v. vania silk mills (p.) ltd. : [1977]107itr300(guj) and cit v. r. m. amin : [1971]82itr194(guj) wherein the learned judges of the gujarat high court had held that in order to hold that there was a transfer, some consideration must move. without any consideration being received for such transfer even for the extinguishment of a right in a property, it could not be said that it was a case of transfer. at the same time, referring to some observations of chagla, cj. in the case of sir kasturchand ltd. v. cit : [1949]17itr493(bom) , he held that in such a case where the asset was totally destroyed without the assessee receiving any consideration.....
Judgment:
ORDER

Per Shri D. V. Junnarkar, Accountant Member - The assessee had a building called Sahyadri at Sawarkar Nagar, Poona. It appears that there was a very heavy rain in Poona on 9-10-1975, in consequence of which the building collapsed and was reduced to rubble. The assessee claimed that she had sustained a capital loss or Rs. 3,33,264, being the estimated value of this property as, according to the assessee, the very asset, namely, the building, having been destroyed, her right in the property was extinguished. Therefore, this was a capital loss. The ITO, however, held that there was no transfer, within the meaning of section 2(47) of the Income-tax Act, 1961 (the Act) in the instant case. He, therefore, rejected the assessees claim.

2. The assessee appealed before the Commissioner (Appeals.). The Commissioner (Appeals) referred to the Gujarat High Court decisions in the cases of CIT v. Vania Silk Mills (P.) Ltd. : [1977]107ITR300(Guj) and CIT v. R. M. Amin : [1971]82ITR194(Guj) wherein the learned Judges of the Gujarat high Court had held that in order to hold that there was a transfer, some consideration must move. Without any consideration being received for such transfer even for the extinguishment of a right in a property, it could not be said that it was a case of transfer. At the same time, referring to some observations of Chagla, CJ. in the case of Sir Kasturchand Ltd. v. CIT : [1949]17ITR493(Bom) , he held that in such a case where the asset was totally destroyed without the assessee receiving any consideration therefor, it was not necessary that the assessee should have received any consideration and the assessee was entitled to the capital loss as if there was a transfer by extinguishment of the assessees right in the property.

3. The revenue is in appeal against the order of the Commissioner (Appeals) in this respect. The learned departmental representative has relied on the Gujarat High Court decisions in the cases of Vina Silk Mills (P.) Ltd. (supra) and R. M. Amin (supra). Further, he has also invited our attention to one more decision of the Gujarat High Court, viz., Gujarat Mineral Development Corpn. Ltd. v. CIT : [1983]143ITR822(Guj) where, after a comprehensive review of the case law on the subject it was held that unless there was some consideration received by the assessee on the extinguishment of the right of an assessee in a capital, asset, there could not be a transfer within the meaning of section 2(47) and, consequently, there could not be any capital loss to which the assessee could be eligible.

4. We have carefully considered the facts and circumstances of the case and the arguments on either side. As stated earlier, the assessees immovable property at Poona was destroyed duet to torrential rain during the accounting period and assessee did not receive either any insurance money for the same (perhaps the property was not insured) or for the sale of the rubble lying on the site. No doubt, the property itself having been destroyed, the assessees right therein had been extinguished. The question at this stage that arises is whether there was any transfer within the meaning of section 2(47). On this subject, we have the unanimous decisions of the Gujarat High Court in the cases of R. M. Amin (supra), Vania Silk Mills (P.) Ltd. (supra) and Gujarat Mineral Development Corpn. Ltd. (supra). The case of R. M. Amin (supra) had been taken up before the Supreme Court in CIT v. R. M. Amin : [1977]106ITR368(SC) and the question before the Supreme Court was whether, on the facts and in the circumstances of the case, there was a transfer of a whole asset within the meaning of section 45 read with section 2(47) of the Act. The learned Judges of the Supreme Court upheld the decision of the Gujarat High Court in this respect, though, of course, whether consideration was necessary in the case of such an extinguishment of right was not considered by the learned Judges of the Supreme Court. They agreed in toto with the finding of the Gujarat High Court. No contrary decision has been brought to our notice by the learned counsel for the assessee. The assessee as relied on the Bombay high Court decision in the case of Sir Kasturchand Ltd. (supra). But we find that it was a case in which the learned Judges of the Bombay High Court were concerned with the applicability of section 23A of the Indian Income-tax Act, 1922 in the case of a private limited company, In our opinion the Bombay High Court decision in the case of Sir Kasturchand Ltd. (supra) is irrelevant for deciding the issue before us. We have for our guidance the three consecutive decisions of a High Court, though not of the Bombay High Court, on the issue whether consideration was necessary in the case of an extinguishment of right in such a case. In our opinion, our decision is obvious in view of the decision of the Bombay High Court the case of CIT v. Smt. Godavaridevi Saraf : [1978]113ITR589(Bom) , wherein the learned Judges of the Bombay High Court, have held that an authority like the Tribunal, acting anywhere in the country, has to respect the law laid down by a High Court, though a different State, so long as there was no contrary decision of any other High Court on that question. Admittedly, as of today, we have no decision contrary to the three Gujarat High Court decisions brought to our notice on behalf of the revenue. In the circumstances, we see no alternative but to reverse the order of the Commissioner (Appeals) and restore the order of the ITO.

5. In the result, the appeal filed by the revenue is hereby allowed.


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