COMMISSIONER OF INCOME-TAX vs. MEHMOODIYAN A TOPIWALA

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ITR/218/1984HC GujaratGJHC24011892198409 February 1999Author: HONOURABLE DR. JUSTICE J.N.BHATT,HONOURABLE MR. JUSTICE ANIL R. DAVE3 pages
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What did the High Court hold?

The High Court, in its oral judgment, referred to its own previous decision in the case of Commissioner of Income-tax v. Mahmoodmiya A. Topiwala (207 ITR 711), which involved the same assessee. The Court found that the present reference was squarely governed by the ratio laid down in that earlier case. Consequently, the High Court held that there was no reason to take a different view and agreed with the earlier decision. Therefore, both questions referred to the Court were answered in the negative, meaning they were answered in favour of the revenue and against the assessee. The reference was disposed of accordingly, with no costs awarded. The operative direction was to answer the questions in favour of the revenue.

What were the facts?

This case involves a reference from the Income Tax Appellate Tribunal (ITAT) to the High Court of Gujarat at Ahmedabad, initiated by the revenue. The assessee, Mehmodiyan A Topiwala, had filed returns for Assessment Years (AY) 1977-78 and 1978-79, which were accepted by the Income Tax Officer. The Appellate Assistant Commissioner (AAC) deleted additions of Rs. 8663 for AY 1977-78 and Rs. 10,221 for AY 1978-79, holding that the gifts were not 'crossed gifts' and thus not covered by Section 64 of the Income Tax Act, 1961. The ITAT, on appeal by the revenue, confirmed the AAC's order. The revenue then sought a reference to the High Court on two questions of law.

What were the issues?

The High Court was asked to decide the following questions of law at the instance of the revenue: 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that as the assessee had made gifts to his major nephew, the gifts made by the assessee's brother to his wife would not come within the mischief of Section 64 of the Income Tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has been right in law in confirming the order of the AAC deleting the addition of Rs. 8663 for AY 1977-78 and Rs. 10,221 for AY 1978-79 as the income of the assessee under Section 64 of the Income Tax Act, 1961? The revenue contended that the gifts made by the assessee's brother to his wife should be considered as falling within the purview of Section 64, implying they were 'crossed gifts' or otherwise taxable in the hands of the assessee. The judgment does not explicitly record the assessee's arguments, but it is implied that the assessee supported the findings of the AAC and the ITAT.

Which sections of the Income-tax Act were involved?

Section 64,Section 256(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 218 of 1984

For Approval and Signature:

Hon'ble MR.JUSTICE J.N.BHATT and MR.JUSTICE A.R.DAVE ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question 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?

-------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus MEHMOODIYAN A TOPIWALA -------------------------------------------------------------- Appearance: MR BB NAIK WITH MR MANISH R BHATT for Petitioner MR RD PATHAK for Respondent

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

CORAM : MR.JUSTICE J.N.BHATT and MR.JUSTICE A.R.DAVE Date of decision: 09/02/99

ORAL JUDGEMENT (Per J.N.Bhatt, J.)

At the instance of the revenue, the following questions have been referred by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A' to this Court for its opinion, under section 256(1) of the Income Tax Act, 1961 (IT Act for short):

"

1.

Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that as the assessee had made gifts to his major nephew, the gifts made by the assessee's brother to his wife would not come within the mischief of Sec.64 of the I.T.Act, 1961 ?

2.

Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has been right in law in confirming the order of the AAC deleting the addition of Rs.8663 for A.Y.1977-78 and Rs.10,221 for A.Y.78-79 as the income of the assessee u/s.64 of the I.T.Act, 1961 ?"

The respondent assessee submitted return of A.Y.1977-78 on 3.8.77 showing his income at Rs.48,900/- and the same was assessed and accepted by the I.T.O. Similarly for the A.Y.1978-79, the assessment order came to be passed accepting the return.

The Appellate Assistant Commissioner of Income-tax, following the earlier decision of the Tribunal, in the case of the same assessee for the A.Y.1974-75 held that the gifts were not crossed gifts and the cases for such assessee had been covered by section 64 of the I.T.Act. The Appellate Tribunal, upon an appeal, at the instance of the revenue confirmed the view taken by the A.A.C. Therefore, at the instance of the revenue, aforesaid two questions have been referred for our opinion.

Learned counsel for the appellant-revenue, drew our attention to a case in Commissioner of Income-tax v. Mahmoodmiya A. Topiwala (same assessee), 207 ITR 711. After having considered the facts of the present case and the ratio laid down by this Court in the aforesaid case, the present reference is squarely governed by the said ratio. We do not find any reason or material to take a different view, and therefore, we are, broadly, in agreement with the earlier view of this Court.

Therefore, questions Nos.1 & 2 referrred to us will have to be answered in negative, i.e. in favour of the revenue and against the assessee and accordingly we answer the questions. The reference shall stand disposed of accordingly without costs.

.... (vjn)

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