COMMISSIONER OF INCOME TAX vs. PRADIP J. KINARIWALA

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ITA/220/1998HC GujaratGJHC24024258199809 December 2004Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI2 pages

AI SummaryRemanded

What did the High Court hold?

The High Court did not decide the issues on merits. Instead, in light of an order dated 22-03-2004 made by the Apex Court in Review Petition Nos.1682-1737 of 2003 and Civil Appeal Nos.6148-6157 of 1998 and cognate matters, the High Court directed the Income Tax Appellate Tribunal (ITAT) to draw up a statement of case and refer the aforementioned questions of law for the opinion of the High Court. The rule was made absolute. Therefore, the Tribunal's decision on the inclusion of the balance share after family trust transfer, the exclusion of the wife's income under Section 64(1)(i), and the deletion of income from six BOIs, as well as the revenue's contention regarding tax evasion, were not adjudicated upon by the High Court in this order. The operative direction was for the ITAT to formulate and refer the questions of law.

What were the facts?

This case involves an application by the Commissioner of Income Tax (the revenue) against an order of the Income Tax Appellate Tribunal (ITAT). The assessee is Pradip J. Kinariwala. The specific assessment years are not mentioned. The revenue is challenging the ITAT's confirmation of the Commissioner of Income Tax (Appeal)'s order. The core of the dispute revolves around the inclusion of certain income in the assessee's total income. The ITAT had directed the Assessing Officer to include only the balance share after reducing a share allegedly transferred to a family trust, and also directed the exclusion of the wife's income under Section 64(1)(i). Furthermore, the ITAT deleted the inclusion of income from six 'BOIs' (likely Business or Investment entities) in the assessee's total income. The revenue contends that the entire transaction was designed to evade taxes.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether the Tribunal was right in law and facts in confirming the order directing the Assessing Officer to include only the balance share of income after reducing the share allegedly transferred to the family trust? 2. Whether the Tribunal was right in law and facts in confirming the order directing to exclude the income of the wife under Section 64(1)(i) of the Income Tax Act, 1961? 3. Whether the Tribunal was right in law and facts in deleting the inclusion of the income of the six BOIs in the total income of the assessee? 4. Whether the Tribunal ought not to have appreciated that the entire transaction was created between 30.11.1984 to 26.12.1984 with a sole view of evading due taxes? Assessee's Contentions: The judgment does not record specific contentions made by the assessee. The assessee's advocate, Mr. S.N. Soparkar, was present and heard. Revenue's Contentions: The revenue, represented by Mr. M.R. Bhatt, contended that the entire transaction was undertaken solely to evade taxes. The revenue is challenging the ITAT's confirmation of the CIT(A)'s orders on the three specific issues mentioned above.

Which sections of the Income-tax Act were involved?

Section 64(1)(i)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX APPLICATION No.220 of 1998

For Approval and Signature:

HON'BLE MR.JUSTICE D.A.MEHTA and HON'BLE MS.JUSTICE H.N.DEVANI

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals?

-------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus PRADIP J. KINARIWALA -------------------------------------------------------------- Appearance: 1. INCOME TAX APPLICATION No. 220 of 1998 MR MANISH R BHATT for Applicant No. 1 MRS SWATI SOPARKAR for Respondent No. 1

--------------------------------------------------------------

CORAM : HON'BLE MR.JUSTICE D.A.MEHTA and HON'BLE MS.JUSTICE H.N.DEVANI

Date of decision: 09/12/2004

ORAL JUDGEMENT (Per : HON'BLE MR.JUSTICE D.A.MEHTA)

Heard Mr.M.R.Bhatt, learned Senior Standing Counsel for the applicant - revenue and Mr.S.N.Soparkar, learned Senior Advocate for the respondent - assessee. In light of the order dated 22-03-2004 made in Review Petition Nos.1682-1737 of 2003 and Civil Appeal Nos.6148-6157 of 1998 and cognate matters by the Apex Court, the following questions of law arise out of the order of the Income Tax Appellate Tribunal. "1. "Whether, the appellate Tribunal is right in law and on facts in confirming the order made by the Commissioner of Income Tax (Appeal) directing the Assessing Officer to include only balance share i.e. after reducing the share which was alleged to be transferred to the family trust ?"

"Whether, the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income-Tax (appeal) directing to exclude the income of the wife under Section 64(1)(i) ?"

"Whether, the Appellate Tribunal is right in law and on facts in deleting the inclusion of the income of the six BOIs in the total income of the assessee ?"

"Whether, the Appellate Tribunal ought not to have appreciated that the entire transaction was created between 30.11.1984 to 26.12.1984 with a sole view of evading due taxes ?"

Accordingly, the Tribunal is directed to draw up the statement of case and raise and refer the questions of law for the opinion of this Court. Rule made absolute. [ D.A.MEHTA,J ] [ H.N.DEVANI,J ]

* * * 'Bhavesh'

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