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Commissioner of Income-tax Vs. Shri Anand Parkash Kapoor - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 57 of 1977
Judge
Reported in[1985]154ITR429(P& H)
ActsIncome Tax Act, 1961 - Sections 47 and 52(2)
AppellantCommissioner of Income-tax
RespondentShri Anand Parkash Kapoor
Appellant Advocate Ashok Bhan, Sr. Adv. and; Ajay Mittal, Adv.
Respondent Advocate H.L. Sibal, Sr. Adv. and; S.C. Sibal, Adv.
Excerpt:
- sections 80 (2) & 89 & punjab motor vehicles rules, 1989, rules 85 & 80: [t.s. thakur, cj, jasbir singh & surya kant, jj] appeal against orders of state or regional transport authority imitation held, a stipulation regarding the period of limitation available for invoking the remedy shall have to be strictly construed. that is because any provision by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply..........the assessee sought certain questions to be referred to the high court for its opinion. thus, the tribunal referred the following questions nos. (i) to (iii) at the instance of the assessee and question no. (iv) at the instance of the revenue:'(i) whether, on the facts and in the circumstances of the case, the tribunal was justified in holding that the fair market value of the shares as on the date of the transfer could be determined only on the basis of rule 1d of the wealth-tax rules, 1957 ? (ii) whether, on the facts and in the circumstances of the case, the tribunal had correctly interpreted the provisions of the explanation ii to rule 1d of the wealth-tax rules, 1957, in observing that the liability of rs. 7,19,086 in respect of the gratuity payable was not deductible in.....
Judgment:

Tewatia, J.

1. The assessee transferred some of his shares of M/s Amritsar Rayon and Silk Mills Pvt. Ltd. on July 9, 1970, to four of his relations. He fixed the value of such shares at Rs. 1,19,500 at the rate of Rs. 500 per share. The ITO did not accept the assessee's valuation of the share and came to the conclusion that each share was worth Rs. 1,045 and computed capital gains at Rs. 1,56,255 and brought it to tax. On an appeal, the AAC came to the conclusion that, in view of Clause (iii) of Section 47 of the T.T. Act, 1961 (hereinafter referred to as 'the Act'), the said amount was exempted from payment of capital gains tax, the same having already been subjected to gift-tax. The assessee who was aggrieved against the valuation fixed by the ITO too had appealed to the AAC who in that regard, however, sustained the order of the ITO. Thereafter, the assessee as also the Revenue challenged the AAC's order before the Tribunal. The Tribunal sustained the order of the AAC whereafter both the Revenue and the assessee sought certain questions to be referred to the High Court for its opinion. Thus, the Tribunal referred the following questions Nos. (i) to (iii) at the instance of the assessee and question No. (iv) at the instance of the Revenue:

'(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the fair market value of the shares as on the date of the transfer could be determined only on the basis of rule 1D of the Wealth-tax Rules, 1957 ?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal had correctly interpreted the provisions of the Explanation II to rule 1D of the Wealth-tax Rules, 1957, in observing that the liability of Rs. 7,19,086 in respect of the gratuity payable was not deductible in determining the market value of the shares ?

(iii) Whether, on the facts and in the circumstances of the case, the transfer of shares was made by the assessee with the object of avoidance or reduction of income-tax liability so as to attract the provisions of Section 52(2) of the Income-tax Act, 1961 ?

(iv) Whether; on the facts and in the circumstances of the case, the Tribunal was right in law in holding that capital gains tax could not be charged under Section 52(2) in view of the provisions of Section 47(iii) of the Income-tax Act, 1961?'

2. The learned counsel for the assessee states that in the event of the question referred at the instance of the Revenue being answered against the Revenue, the other three questions would not arise for consideration. It is, therefore, necessary to deal in the first instance with the question got referred at the instance of the Revenue.

3. The AAC of Income-tax as also the Tribunal based its decision in regard to the exigibility of the amount in question to capital gains tax on the decisions of the various High Courts as against the Full Bench decision of the Kerala High Court in ITO v. Varghese : [1973]91ITR49(Ker) , which decision alone supports the stand taken on behalf of the Revenue. In the meantime, an appeal taken against Varghese's case in the Supreme Court has been decided which is Varghese v. ITO : [1981]131ITR597(SC) and their Lordships have expressly held that in view of the provisions of cl. (iii) of Section 47 of the Act, the amount in question having already been subjected to gift tax, the same stands exempted from the payment of income-tax and overruled the Full Bench decision of the Kerala High Court in ITO v. Varghese : [1973]91ITR49(Ker) and restored the single Bench decision of the Kerala High Court in Varghese v. ITO : [1970]77ITR719(Ker) .

4. In view of the above, the question referred at the instance of the Revenue by the Tribunal has to be answered against the Revenue and in favour of the assessee.

5. Sinee the other questions are not pressed for decision on behalf of the assessee, the reference in that regard is returned unanswered. No order as to costs.


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