COMMISSIONER OF INCOME-TAX vs. DAXABEN RAMANLAL

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ITR/196/1984HC GujaratGJHC24011870198409 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 held that the assessee was entitled to the deduction claimed. The Court referred to its own identical decision in the case of CIT v. Daxaben Ramanlal, reported in 197 ITR 123. The Court found that the ratio propounded in the earlier decision was squarely attracted to the facts of the present case. Therefore, the question was answered affirmatively, in favour of the assessee and against the Revenue. The reference was disposed of accordingly, with no order as to costs. The operative direction was to answer the question in favour of the assessee.

What were the facts?

The assessee, Daxaben Ramanlal, sold immovable properties and claimed a deduction for the amount paid to redeem an equitable mortgage on these properties when computing capital gains. The Income Tax Officer (ITO) disallowed this claim. The Appellate Assistant Commissioner (AAC) allowed the claim for Assessment Year 1973-74. The Revenue appealed to the Income Tax Appellate Tribunal (ITAT), which also ruled in favour of the assessee, rejecting the Revenue's appeal. The ITAT then referred a question of law to the High Court at the instance of the Revenue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the assessee was entitled to a deduction for the amount paid to redeem the equitable mortgage on the immovable properties which were the subject of capital gains? Assessee's contention: The assessee argued that the amount paid to redeem the equitable mortgage should be allowed as a deduction in computing capital gains. (No specific authorities or precedents are mentioned for the assessee's argument in the judgment). Revenue's contention: The Revenue contended that the deduction claimed by the assessee was not admissible. (No specific authorities or precedents are mentioned for the Revenue's argument in the judgment).

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 196 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? Yes

2.

To be referred to the Reporter or not? No @@. To be referred to the Reporter or not? No @@. To be referred to the Reporter or not? No @@. To be referred o the Reporter or not? No @@. To be referred to the Rep rter or not? No @@. To be referred to the Reporter or n t? No @@. To be referred to the Reporter or not? No @@. To be referred to the Reporter or not? No @@. To be referred to the Reporter or not? No @@. To be referred to the Reporter or not? No @@. To be eferred to the Reporter or not? No @@. To be referred t the Reporter or not? No @@. To be referred to the Repo ter or not? No @@. To be referred to the Reporter or no ? No @@. To be referred to the Reporter or not? No

3.

Whether Their Lordships wish to see the fair copy of the judgement? No 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? No 5. Whether it is to be circulated to the Civil Judge? No -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus DAXABEN RAMANLAL -------------------------------------------------------------- Appearance: MR BB NAIK with MR MANISH R BHATT for Petitioner

SERVED BY RPAD - (N) for Respondent No. 1

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

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.)

By this reference under sec. 256(1) of the Income-tax Act, 1961, the following question is referred by the Income Tax Appellate Tribunal for our opinion.

"Whether, on the facts and in the circumstances of the case, the assessee was entitled to a deduction for the amount paid to redeem the equitable mortgage on the immovable properties which were the subject of capital gains?"

2.

The respondent-assessee had sold certain immovable properties and in the course of the said transaction, acquired capital gain. In computing this capital gain, the assessee claimed deduction equivalent to the net liability which had been already charged on the immovable properties which were acquired by way of gift and it was subject to equitable mortgage. This claim was not found favour with the ITO. He, therefore, disallowed the said claim, whereas, upon an appeal, the Appellate Assistant Commissioner allowed that claim, in respect of A.Y. 1973-74. 3. Therefore, the matter was taken in appeal before the Income Tax Appellate Tribunal by the Revenue and the Tribunal also held that the assessee is entitled to the deduction as claimed, while rejecting the appeal of the Revenue. That is how, at the instance of the Revenue, the aforesaid question is referred to us, by the Tribunal.

4.

During the course of hearing of this matter, our attention was invited to an identical decision in a case between the same parties, reported in C.I.T. v. Daxaben Ramanlal, 197 ITR 123. After having considered our earlier decision, and the facts of the present case, the ratio propounded by us in earlier decision is squarely attracted to the facts of the present case. With the result, in our opinion, and in the light of the peculiar facts of the present case, the question is required to be answered affirmatively, that is, in favour of the assessee and against the Revenue. This reference

accordingly stands disposed of without any order of costs.

_____ (hn)

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