COMMISSIONER OF INCOME-TAX vs. GIRISHKUMAR S PATEL

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ITR/29/1991HC GujaratGJHC24013266199107 August 2003Author: HONOURABLE MR. JUSTICE D.H.WAGHELA,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
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What did the High Court hold?

The High Court, following its decision in a companion case (CIT Vs. Shri Subodhchandra Shantilal Patel, ITR 27/1991), answered all three referred questions in the affirmative, in favour of the assessee and against the Revenue. This means the Court found that the Appellate Tribunal was justified in entertaining the miscellaneous application and allowing it, thereby quashing the Commissioner (Appeals)'s order and holding that the transaction did not result in taxable capital gains. The Court also upheld the Tribunal's finding that there was no capital gains in the transaction in question. The reasoning for this decision is not detailed in this judgment but is stated to be identical to the companion case. The reference was disposed of accordingly, with no order as to costs.

What were the facts?

The case involves an Income Tax Reference filed by the Revenue against the assessee, Girishkumar S Patel, for the assessment year 1982-83 (Samvat year 2037). The Income Tax Appellate Tribunal (ITAT) had previously passed an order that is under challenge. The facts and circumstances of this case are stated to be identical to those in Income-tax Reference No. 27/1991, concerning Commissioner of Income-tax Vs. Shri Subodhchandra Shantilal Patel. The ITAT had entertained a miscellaneous application filed by the assessee, quashed an order of the Commissioner (Appeals), and held that a particular transaction did not result in taxable capital gains. The Revenue is questioning the ITAT's justification for entertaining the miscellaneous application and its subsequent decision.

What were the issues?

The Tribunal had to decide three questions referred by the ITAT for the High Court's opinion: 1. Whether, in law and on facts, the Appellate Tribunal was justified in entertaining a miscellaneous application filed by the assessee and allowing the same by quashing the order of the Commissioner (Appeals) by holding that the transaction did not result in taxable capital gains? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that there was no capital gains in the transaction in question? 3. Whether, when the Tribunal held under order dated 27-11-1986 that there was no genuine conversion of the shares and debentures into stock-in-trade before transferring the same into a partnership firm, the Tribunal was right in law in entertaining the claim of the assessee that the transfer did not result into taxable capital gains? The Revenue's contentions are implicitly that the ITAT erred in entertaining the miscellaneous application and in its subsequent findings on capital gains. The judgment does not explicitly record the assessee's arguments.

Which sections of the Income-tax Act were involved?

Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 29 of 1991

Hon'ble MR.JUSTICE D.H.WAGHELA

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 concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals?

-------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus GIRISHKUMAR S PATEL -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner No. 1 MR MANISH J SHAH for Respondent No. 1

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

CORAM : MR.JUSTICE D.H.WAGHELA and MR.JUSTICE D.A.MEHTA

Date of decision: 07/08/2003

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

1.

This Reference under section 256(2) of the Income-tax Act, 1961 (the Act), is at the instance of the Revenue and the following three questions have been referred by the Income-tax Appellate Tribunal, Ahmedabad Bench "A" for our opinion:

"

1.

Whether, in law and on facts, the Appellate Tribunal was justified in entertaining miscellaneous application filed by the assessee and allowing the same by quashing the order of the Commissioner (Appeals) by holding that the transaction did not result in taxable capital gains?

2.

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that there was no capital gains in the transaction in question?

3.

Whether, when the Tribunal held under order dtd: 27-11-1986 that there was no genuine conversion of the shares and debentures into stock in trade before transferring the same into partnership firm, the Tribunal was right in law in entertaining the claim of the assessee that the transfer did not result into taxable capital gains?"

The Assessment year is 1982-83 and the corresponding period is Samvat year 2037. 2. It is common ground between the parties that the facts and circumstances are identical to those obtaining in Income-tax Reference No.27/1991 in the case of The Commissioner of Income-tax Vs. Shri Subodhchandra Shantilal Patel, and hence it is not necessary to set out the facts in controversy in detail.

3.

Hence, for the reasons stated in our decision rendered today in the case of The Commissioner of Income-tax Vs. Shri Subodhchandra Shantilal Patel, in ITR 27 of 1991, the three questions referred to us are answered as follows:

Question No.1 in the affirmative i.e. in favour of the assessee and against the revenue, question no.2 in the affirmative i.e. in favour of the assessee and against the revenue, and question no.3 in the affirmative i.e. in favour of the assessee and against the revenue.

4.

The reference stands disposed of accordingly. There shall be no order as to costs.

[D.H. WAGHELA J.]

[D.A. MEHTA J.] *ar*

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