COMMISSIONER OF INCOME TAX vs. P P CONTRACTOR

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ITR/2/1985HC GujaratGJHC24012135198510 August 2000Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE ANIL R. DAVE2 pages
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What did the High Court hold?

The High Court, following its earlier decision in CIT v. P.P. Contractor (192 ITR 261), answered both referred questions in the affirmative, against the Revenue and in favour of the assessee. The Tribunal's conclusion that the deed of assignment dated 16.12.1951 did not suffer from any infirmity was upheld. Consequently, the Tribunal's holding that only 1/2 of the income of the residuary property of late Shri Pestonji Contractor could be taxed in the hands of the assessee was also affirmed. The reasoning is based on the binding precedent established by the High Court in the prior identical case. The Reference was disposed of accordingly, with no order as to costs.

What were the facts?

This case involves an Income Tax Reference No. 2 of 1985 before the High Court of Gujarat at Ahmedabad. The Income Tax Appellate Tribunal, Ahmedabad Bench 'C', referred two questions for the opinion of the High Court under Section 256(1) of the Income-tax Act, 1961. The questions pertain to the validity of a deed of assignment executed by the assessee and the taxability of income from the residuary property of late Shri Pestonji Contractor. The learned counsel for the petitioner (Revenue) pointed out that identical questions had already been answered by the High Court in CIT v. P.P. Contractor, reported in 192 ITR 261, in favour of the assessee.

What were the issues?

1. Whether the Tribunal was justified in concluding that the deed of assignment dated 16.12.1951 executed by the assessee did not suffer from any infirmity? This question concerns the validity and legal standing of the assignment deed. The Revenue likely argued that the deed was invalid or suffered from some defect, making the assignment ineffective for tax purposes. The Assessee would have contended that the deed was valid and legally sound. 2. Whether the Tribunal was justified in holding that only 1/2 of the income of the residuary property of late Shri Pestonji Contractor could be taxed in the hands of the assessee? This question relates to the apportionment of income from the residuary property. The Revenue likely argued for a higher proportion or the entire income to be taxed in the assessee's hands, possibly disputing the basis for splitting the income. The Assessee would have argued for the 1/2 share as determined by the Tribunal, based on the facts and the deed of assignment.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 2 of 1985

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and Hon'ble MR.JUSTICE A.R.DAVE

============================================================ 1. Whether Reporters of Local Papers may be allowed : YES 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 1 Yes 2 to 5 No -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus P P CONTRACTOR -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner SERVED BY RPAD - (N) for Respondent No. 1

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

CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE A.R.DAVE

Date of decision: 10/08/2000

ORAL JUDGEMENT (per R.K. Abichandani, J.)

The Income Tax Appellate Tribunal, Ahmedabad Bench 'C', has referred the following two questions for the opinion of this Court under sec. 256(1) of the Income-tax Act, 1961. "

1.

Whether the facts and in the circumstances of the case, the Tribunal was justified in concluding that the deed of assignment dated 16.12.51 executed by the assessee did not suffer from any infirmity?

2.

Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that only 1/2 of the income of the residuary property of late Shri Pestonji Contractor could be taxed in the hands of the assessee?"

2.

When this Reference is called out, it is pointed out to us by the learned counsel that identical questions have already been answered by this court in CIT v. P.P. Contractor reported in 192 ITR 261 against the revenue.

3.

Following the said decision, both the questions referred to this court are answered in the affirmative, against the revenue and in favour of the assessee.

4.

The Reference stands disposed of accordingly with no order as to costs. ____

(A.R. Dave, J.) (hn)

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