MAYABEN S SHAH vs. COMMISSIONER OF INCOME TAX

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ITR/92/1986HC GujaratGJHC24010716198619 June 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
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What did the High Court hold?

The High Court held that both questions referred to it were to be answered in the affirmative, meaning against the assessee and in favour of the Revenue. The Court noted that the learned advocates for both parties fairly submitted that the main question had already been decided by the Hon'ble Supreme Court in the case of Singhai Rakeshkumar Vs. Union of India and others (247 I.T.R. 150). Consequently, the first question, concerning the taxability of capital gains from the sale of agricultural land under Section 45, was answered in the affirmative. As the first question was answered in the affirmative, the second question, regarding the entitlement to substitute the fair market value as on 1/4/1970, was also answered in the affirmative. The Court disposed of the reference accordingly with no order as to costs. The ratio decidendi is that capital gains from the sale of agricultural land are taxable under Section 45, and the assessee is not entitled to substitute the fair market value as on 1/4/1970 if the land was included in the definition of 'capital asset' from that date, as per the Supreme Court's ruling.

What were the facts?

This case involves an Income Tax Reference filed by the assessee, Mayaben S. Shah, at the instance of the Income-tax Appellate Tribunal, Ahmedabad Bench "A". The reference pertains to the assessment year(s) not explicitly stated in the judgment. The core issue revolves around the taxability of capital gains arising from the sale of agricultural land. The Tribunal's decision, which is under challenge, held that such gains were taxable. The procedural history indicates that the Tribunal referred specific questions of law to the High Court for its opinion under Section 256(1) of the Income-tax Act, 1961. The High Court heard arguments from both the assessee and the Revenue.

What were the issues?

The High Court was asked 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 reply 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 1/4/1970 for the reason that from that day the agricultural land was included in the definition of 'capital asset'. Assessee's Contentions: The assessee, through their learned advocate, submitted that the main question referred to the Court had already been decided by the Supreme Court in the case of Singhai Rakeshkumar Vs. Union of India and others, reported in 247 I.T.R. 150. Revenue's Contentions: The Revenue, through their learned advocate, also acknowledged that the Supreme Court decision in Singhai Rakeshkumar Vs. Union of India and others was relevant to the issue.

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 92 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 -------------------------------------------------------------- MAYABEN S SHAH Versus COMMISSIONER OF INCOME TAX -------------------------------------------------------------- Appearance: MR MANISH J.SHAH FOR MR JP SHAH for Applicant. MR 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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