BHANUMATIBEN S SHAH vs. COMMISSIONER OF INCOME TAX

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ITR/96/1986HC GujaratGJHC24010720198619 June 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Tribunal was right in law in both its findings. Regarding the first question, the Court affirmed the Tribunal's decision that capital gain arising from the sale of agricultural land is liable to tax under Section 45 of the Income-tax Act, 1961. This decision was based on the submission by both parties that the Hon'ble Supreme Court had already decided this issue in the affirmative in the case of Singhai Rakeshkumar Vs. Union of India and others (247 I.T.R. 150), implying the Supreme Court ruled in favour of the Revenue. Consequently, as the first question was answered in the affirmative (against the assessee), the second question was also answered in the affirmative, meaning the assessee was not entitled to substitute the fair market value as on April 1, 1970. The Court disposed of the reference accordingly, with no order as to costs. No issue was expressly left undecided.

What were the facts?

This case involves an Income Tax Reference filed by the assessee, Bhanumatiben S. Shah, at the instance of the Income-tax Appellate Tribunal, Ahmedabad Bench 'A'. The reference was made to the High Court of Gujarat for its opinion on specific questions of law arising from the Tribunal's order. The assessee challenged the Tribunal's decision regarding the taxability of capital gains from the sale of agricultural land and the eligibility to substitute the fair market value as of April 1, 1970. The Revenue was represented by the Commissioner of Income Tax. The procedural history indicates the matter reached the High Court via a reference under Section 256(1) of the Income-tax Act, 1961.

What were the issues?

The Tribunal had to decide two questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the capital gain arising from the sale of agricultural land was liable to tax under Section 45 of the Income-tax Act, 1961. 2. If the answer to the first question is in the affirmative, whether the Tribunal was right in law in holding that the assessee was not entitled to substitute the fair market value as on April 1, 1970, for the reason that from that day, agricultural land was included in the definition of 'capital asset'. The assessee, through its learned advocate, argued that the capital gain from the sale of agricultural land should not be taxable and that the fair market value as of April 1, 1970, should be considered. The Revenue, through its learned advocate, contended that the capital gain is taxable and the assessee is not entitled to substitute the fair market value as of April 1, 1970. Both parties submitted that the main question had been decided by the Supreme Court in the case of Singhai Rakeshkumar Vs. Union of India and others.

Which sections of the Income-tax Act were involved?

Section 45,Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 96 of 1986

For Approval and Signature:

Hon'ble MR.JUSTICE A.R.DAVE 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 -------------------------------------------------------------- BHANUMATIBEN S SHAH Versus COMMISSIONER OF INCOME TAX -------------------------------------------------------------- Appearance: MR MANISH J.SHAH FOR MR JP SHAH for Applicant. MR B.B.NAYAK FOR MR MANISH R BHATT for Respondent No. 1

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

CORAM : MR.JUSTICE A.R.DAVE and MR.JUSTICE D.A.MEHTA

Date of decision: 19/06/2001

ORAL JUDGEMENT (Per : MR.JUSTICE A.R.DAVE)

1.

At the instance of the assessee the Income-tax Appellate Tribunal, Ahmedabad Bench "A" has referred to this Court for its opinion the following questions of law under the provisions of Section 256(1) of the Income-tax Act,1961. "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the capital gain arising from sale of agricultural land was liable to tax u/s.45?

If the reply to the above question is in the affirmative, whether Tribunal was right in law in holding that the assessee was not entitled to substitute the fair market value as on 1/4/1970 for the reason that from that day the agricultural land was included in the definition of 'capital asset'?"

Mr.Manish Shah, learned Advocate has appeared for the applicant assessee whereas Shri B.B.Nayak, learned Advocate has appeared for the Revenue.

2.

Learned Advocates appearing for the parties have fairly submitted that the main question which has been referred to this Court has already been decided by the Hon'ble Supreme Court in the case of Singhai Rakeshkumar Vs. Union of India and others, reported in 247 I.T.R. 150. The said question has been replied in the affirmative i.e. against the assessee and in favour of the Revenue.

3.

As the first question has been replied in the affirmative, the second question is also replied in the affirmatrive i.e. against the assessee and in favour of the Revenue.

4.

This Reference stands disposed of accordingly with no order as to costs. (A.R.Dave, J) (D.A.Mehta,J

m.m.bhatt

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