C.I.T. vs. BHIMA INVESTMENT PVT. LTD.

ITR/32/2003HC GujaratGJHC24025688200315 February 2006Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI4 pages
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What were the facts?

This case involves an Income Tax Reference filed by the Commissioner of Income Tax (CIT) against Bhima Investment Pvt. Ltd. The reference was made by the Income Tax Appellate Tribunal (ITAT) under Section 256(1) of the Income Tax Act, 1961. The High Court of Gujarat at Ahmedabad was to decide two questions of law referred by the ITAT. The revenue's counsel appeared and accepted notice, undertaking to file appearance. The revenue's counsel also requested that the filing of the paper-book be dispensed with, as the issues referred were concluded by a prior judgment of the High Court in CIT v. Brahmi Investments Pvt. Ltd. The parties agreed that the questions were concluded by the aforementioned decision.

What did the High Court hold?

The High Court, for the reasons stated in its judgment dated 10/02/2006 in the case of CIT v. Brahmi Investments Pvt. Ltd. (I.T.R. No.102 of 1995), answered the referred questions. Question No.1 was answered in the affirmative, in favour of the assessee and against the revenue. This means the Tribunal was correct in holding that capital gains should be computed by taking the cost in the hands of the previous owner, KPPL, as per Section 49(1)(iii)(e). Question No.2 was answered in the negative, in favour of the revenue and against the assessee. This implies that the Tribunal was incorrect in holding that no capital gains were chargeable despite Section 46(2), based on the benefit of Section 47(v). The reference was disposed of accordingly.

What were the issues?

The Tribunal referred the following two questions for determination by the High Court: 1. Whether the Appellate Tribunal is right in law and on facts in holding that, in view of section 49(1)(iii)(e) capital gain should be computed by taking the cost in the hands of the previous owner, namely, KPPL? 2. Whether the Appellate Tribunal is right in law and on facts in holding that inspite of section 46(2) capital gains chargeable to tax had not arisen in this case in view of the fact that benefit of section 47(v) would be available to the assessee? Contentions: Assessee: The assessee contended that capital gains should be computed based on the cost in the hands of the previous owner, as per Section 49(1)(iii)(e), and that no capital gains were chargeable due to the benefit of Section 47(v). Revenue: The revenue contended that Section 46(2) should be considered, and that the benefit of Section 47(v) was not available to the assessee, leading to a chargeability of capital gains.

Which sections of the Income-tax Act were involved?

Section 49(1)(iii)(e),Section 46(2),Section 47(v),Section 256(1)

AI-generated summary — verify with the full judgment below

ITR/32/2003 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 32 of 2003 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ============================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ============================================================== C.I.T. - Applicant(s)

Versus BHIMA INVESTMENT PVT. LTD. - Respondent(s) ============================================================== Appearance : MR BB NAIK for Applicant MR RK PATEL for Respondent(s) : 1, ================================================================== CORAM :  HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 15/02/2006 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1.The Board shows the endorsement “Notice not

The order continues below.

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