COMMISSIONER OF INCOME-TAX vs. RANJIBEN CHINUBHAI

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ITR/105/1988HC GujaratGJHC24013181198816 January 2001Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE MOHIT S. SHAH2 pages

AI SummaryAllowed

What did the High Court hold?

The High Court held that the capital gains should be taxed in the hands of the trust and not in the hands of the beneficiary. This decision was based on a prior judgment of a Division Bench of the same court in CIT vs. Rajniben Chinubhai (Indl.) (ITR No. 175/85), decided on October 19, 2000. The court found that the controversy in the present reference was answered by this earlier decision. Therefore, the reference was answered in favour of the assessee and against the revenue. The operative direction was to dispose of the reference accordingly, with no order as to costs.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'B', referred a question of law to the High Court of Gujarat concerning Assessment Year 1982-83. The Income Tax Officer (ITO) had included capital gains of Rs. 6885/- earned by a trust, of which the assessee was the sole beneficiary, in the assessee's total income. The Commissioner of Income Tax (Appeals) [CIT(A)] directed the ITO to exclude these capital gains from the assessee's income, a view confirmed by the ITAT. The revenue challenged this decision. The respondent assessee was served but did not appear.

What were the issues?

1. Whether the Tribunal is right in law in holding that the capital gains is to be taxed in the hands of the trust and not in the hands of the assessee, a sole beneficiary? (Question of law, concerning the taxation of capital gains under the Income Tax Act, 1961). Assessee's Contention: Not recorded as the respondent did not appear. Revenue's Contention: The revenue argued that the capital gains should be taxed in the hands of the assessee, the sole beneficiary. The revenue relied on a previous decision of the same High Court in CIT vs. Rajniben Chinubhai (Indl.) in ITR No. 175/85, decided on October 19, 2000, which addressed a similar controversy.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 105 of 1988

For Approval and Signature:

Hon'ble MR.JUSTICE J.M.PANCHAL and Hon'ble MR.JUSTICE M.S.SHAH

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

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

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?

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus RANJIBEN CHINUBHAI -------------------------------------------------------------- Appearance: MR AKIL QURESHI with MR MANISH R BHATT for Petitioner SERVED BY RPAD - (N) for Respondent No. 1

-------------------------------------------------------------- CORAM : MR.JUSTICE J.M.PANCHAL and MR.JUSTICE M.S.SHAH

Date of decision: 16/01/2001

ORAL JUDGEMENT (Per : MR.JUSTICE J.M.PANCHAL)

At the instance of the revenue, the Income-tax Appellate Tribunal, Ahmedabad Bench "B" has referred the following question of law for opinion of this Court in respect of Assessment Year 1982-83 :-

"Whether the Tribunal is right in law in holding that the capital gains is to be taxed in the hands of the trust and not in the hands of the assessee, a sole beneficiary ?"

The ITO included in the total income of the assessee, the capital gains of Rs.6885/- earned by the Trust of which the assessee is the beneficiary. Following the decision of the ITAT, Ahmedabad Bench "B" in ITA No. 620/Ahd/1984, the CIT(A) directed the ITO to assessee) in ITR No. 175/85, decided by the Hon'ble the Chief Justice and Mr Justice A.R. Dave on October 19, 2000. The Division Bench in the aforesaid case has held that the amount of capital gains should be taxed in the hands of the Trust and not in the hands of the beneficiary.

In view of the decision referred to above, the reference is answered in favour of the assessee and against the revenue. The reference accordingly stands disposed of with no order as to costs.

(J.M. Panchal, J.)

(M.S. Shah, J.)

sundar/-

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