V.K.NATESAN vs. THE COMMISSIONER OF INCOME TAX
What did the High Court hold?
The High Court held that the questions framed by the appellant for consideration were not substantial questions of law, as required by Section 260A(1) of the Income Tax Act, 1961, for an appeal to lie to the High Court. The Court found that the appellant was essentially seeking a rehearing on questions of fact. Therefore, the Court did not find any reason to entertain the appeal. The appeal was dismissed at the admission stage. No specific finding was made by the High Court on the merits of whether the gains were short-term or long-term capital gains, as the appeal was not admitted.
What were the facts?
The appeal concerns Assessment Year 2004-05. The assessee, V.K. Natesan, filed a return declaring an income of Rs. 6,86,025. The assessing authority determined the total income to be Rs. 23,12,100, of which Rs. 13,99,528 was treated as short-term capital gains. This classification of gains is the subject of the dispute. The assessee claimed the gains arose from the sale of 5750 shares of Federal Bank Limited, held by himself, his wife, daughter, and son. The Income Tax Appellate Tribunal noted that the assessee did not appear before the assessing officer or adduce evidence, despite being permitted to do so.
What were the issues?
1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law and fact in assessing the capital gains tax arising from the sale of 5750 shares of Federal Bank in the hands of the appellant as short-term capital gains? (Question of mixed law and fact, concerning Section 2(42A) of the Income Tax Act, 1961). Assessee's Contention: The assessee contended that the gains were from the sale of shares held by him and his family members. The judgment does not record specific arguments made by the assessee before the Tribunal or High Court regarding the classification of gains as long-term or short-term, beyond the initial claim. Revenue's Contention: The revenue's position, as reflected in the assessing authority's order and upheld by the Tribunal, was that the gains were short-term. The judgment does not record specific arguments made by the revenue before the High Court.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT J.Chelameswar, C.J. This is an appeal preferred under Section 260A of the Income Tax Act, 1961 aggrieved by the order dated 8th August, 2008 in ITA No.513/Coch/2007 on the file of the Income Tax Appellate Tribunal, Cochin Bench. The assessment year is 2004-05. 2. For the said assessment year the appellant herein filed return declaring an income of Rs.6,86,025/- whereas the assessing authority came to the conclusion that the appellant had a total income of Rs.23,12,100/- assessable to tax. Out of the abovementioned amount, an amount of Rs.13,99,528/- was held to be an income of the appellant herein falling under the head of short term capital gains.
It is the abovementioned conclusion of the assessing authority which is the subject matter of dispute in the instant appeal.
According to the appellant, the abovementioned amount represents the long term capital gain of the appellant accrued on account of the sale of shares held by him in the Federal Bank Limited. According to him, a total of 5750 shares shares were held by the appellant, his wife, daughter and son in the following manner: “Belongs to V.K.Natesan 1150
S.Preethy 1150 VP Vandana 1150 V.N.Tushar 2300 -------- Total 5750”
The appellate Tribunal recorded that though the appellant herein was asked to appear before the assessing authority, the appellant could not appear before the assessing officer and did not adduce any evidence though he was permitted to produce evidence to substantiate his claim.
In the background of the abovementioned fact, the instant appeal is filed framing the following questions for consideration of this Court: “A. Whether on the facts and in the circumstances of the case the Tribunal is correct in law and fact in assessing the capital gains tax arising out of the sale of 5750 shares of the Federal Bank in the hands of the appellant as short term capital gains? B. Whether on the facts and in the circumstances of the case the Tribunal is correct in law and fact in assessing the gains arising out of the sale proceeds of 5750 shares of the Federal Bank as short terms capital gains?”
Section 260A(1) of the Income Tax Act reads as follows: “An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law.”
It can be seen from the above that an appeal to this Court is maintainable if only this Court is satisfied that the case involves a substantial question of law. The questions extracted above, by no stretch of imagination can be - 4 - categorised as substantial question of law. The appellant seeks a rehearing on the questions of fact. In the circumstances, we do not see any reason to entertain this appeal. The appeal is, therefore, dismissed at the admission stage.
J.Chelameswar,
Chief Justice
P.N.Ravindran,
Judge vns
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