NARENDRA SOMCHAND SHAH vs. COMMISSIONER OF INCOME TAX

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ITR/95/1986HC GujaratGJHC24010719198619 June 2001Author: HONOURABLE MR. JUSTICE ANIL R. DAVE,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was right in law in both its findings. For the first issue, the Court relied on the Supreme Court's decision in *Singhai Rakeshkumar Vs. Union of India and others* (247 I.T.R. 150), which affirmed that capital gains arising from the sale of agricultural land are taxable under Section 45 of the Income-tax Act, 1961. Consequently, the second question, which was conditional on the first being answered affirmatively, was also answered in the affirmative, meaning the assessee was not entitled to substitute the fair market value as on April 1, 1970. The reasoning was that the Supreme Court's judgment directly addressed and settled the taxability of such gains. The ratio decidendi is that agricultural land, when it falls within the definition of 'capital asset' as per the relevant provisions of the Act, attracts capital gains tax upon its sale, and the valuation date for computing capital gains is determined by the law applicable at the time of transfer. The reference was disposed of accordingly.

What were the facts?

This case involves an Income Tax Reference filed by the assessee, Narendra Somchand Shah, against the Commissioner of Income Tax. The Income-tax Appellate Tribunal, Ahmedabad Bench "A", had referred two questions of law to the Gujarat High Court for its opinion. The assessment year(s) are not explicitly stated. The core of the dispute revolves around the taxability of capital gains arising from the sale of agricultural land and the assessee's entitlement to substitute the fair market value as of April 1, 1970. The procedural history indicates that the Tribunal's decision led to this reference to the High Court.

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's contention, as represented by Mr. Manish Shah, is implicitly that the capital gain should not be taxed and that the fair market value as of April 1, 1970, should be considered. The Revenue, represented by Shri B.B. Nayak, likely argued for the taxability of the capital gain and against the substitution of the fair market value. Both parties submitted that the Supreme Court's decision in *Singhai Rakeshkumar Vs. Union of India and others* (247 I.T.R. 150) was decisive.

Which sections of the Income-tax Act were involved?

Section 45

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 95 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 -------------------------------------------------------------- NARENDRA SOMCHAND 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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