COMMISSIONER OF INCOME TAX BARODA vs. HORMASJI MANCHARJI VAID

ITR/116/1982HC GujaratGJHC24010925198220 August 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, in light of the Full Bench's opinion in Arundhati Balkrishna vs. CIT (138 ITR 245), held that the transfer of immoveable property of a value exceeding Rs. 100 is effected on the date of execution of the document. Consequently, the transfer of the lease deed in this case took place on October 13, 1973, when it was executed. Therefore, the capital gain arose during the previous year ending on October 26, 1973, which is relevant for Assessment Year 1974-75. The High Court answered both questions in the negative, meaning in favour of the revenue and against the assessee. The ITAT's order was set aside, and the reference was disposed of.

What were the facts?

The assessee, Hormasji Mancharji Vaid, sold leasehold rights in a house property at Nani Daman for Rs. 1,25,000. An initial deed executed on August 3, 1968, was unregistered. A subsequent deed was executed on October 13, 1973, and registered on March 2, 1974. The assessee's accounting year (Samvat Year 2029) ended on October 26, 1973. The Income Tax Officer (ITO) sought to tax the capital gains for Assessment Year (AY) 1974-75. The Commissioner of Income-tax (Appeals) set aside the ITO's order. The Income Tax Appellate Tribunal (ITAT) held that the capital gains were not exigible for AY 1974-75, finding the transfer occurred upon registration on March 2, 1974, which fell in Samvat Year 2030, relevant for AY 1975-76. The Commissioner of Income Tax, Baroda, referred the matter to the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances, the ITAT was right in law in holding that capital gains arising from the transfer of house property at Nani Daman were not exigible to tax during the previous year relevant to AY 1974-75? (Question of law) 2. Whether, on the facts and in the circumstances, the ITAT was right in law in holding that since the registration was completed on March 2, 1974, the surplus arising from the transfer of house property at Nani Daman could not be taxed during the accounting period ending October 26, 1973? (Question of law) Assessee's Contention: The ITAT's finding that the transfer occurred upon registration on March 2, 1974, and thus the capital gains were not taxable for AY 1974-75, was correct. Revenue's Contention: The transfer of immoveable property exceeding Rs. 100 in value is effected on the date of execution of the document, not on the date of registration. Therefore, the capital gains should be taxed in the year of execution, i.e., AY 1974-75.

Which sections of the Income-tax Act were involved?

Section 12

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 116 of 1982

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

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

2.

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

4.

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?

5.

Whether it is to be circulated to the Civil Judge? : NO -----------------------------------------------

The order continues below.

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