MALLIKA SARABHAI TRUST NO 12 vs. COMMISSIONER OF INCOME-TAX

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ITR/409/1992HC GujaratGJHC24015749199230 July 1998Author: HONOURABLE MR. JUSTICE C.K.THAKKER,HONOURABLE MR. JUSTICE M.C.PATEL2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court decided to dispose of the reference unanswered. The Court noted that the matter was decided in favour of the assessee by the lower authorities, including the Income Tax Appellate Tribunal, primarily due to concessions made before the Tribunal. The Court also referred to a previous case, COMMISSIONER OF INCOME-TAX v. LEENA SARABHAI (N.CH.), 221 ITR 520, where a similar matter, due to peculiar facts and circumstances, was left unanswered by this Court. Given these circumstances, the Court found it appropriate to dispose of the present reference unanswered as well. No order as to costs was made. The specific findings on Section 47(vii) and Section 2(47) were not adjudicated upon by the High Court in this reference.

What were the facts?

This case involves an Income Tax Reference before the High Court of Gujarat at Ahmedabad concerning the assessee, Mallika Sarabhai Trust No. 12, and the respondent, the Commissioner of Income-Tax. The assessment years are not explicitly stated. The challenge is to the order of the Income Tax Appellate Tribunal (ITAT). The core of the dispute revolves around whether the assessee was entitled to exemption under Section 47(vii) of the Income Tax Act, 1961, and whether the receipt of shares, debentures, and bonds of amalgamated companies constituted a 'transfer' under Section 2(47) of the Act, thus attracting capital gains tax. The matter was previously decided in favour of the assessee by lower authorities, including the ITAT, due to concessions made before the Tribunal. A related matter, COMMISSIONER OF INCOME-TAX v. LEENA SARABHAI (N.CH.), 221 ITR 520, was left unanswered by this Court due to peculiar facts.

What were the issues?

The Tribunal had to decide two main 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 assessee was not entitled to exemption under Section 47(vii) of the Income Tax Act, 1961? 2. Whether, the Appellate Tribunal is right in law and on facts in holding that when the assessee received shares, debentures, and bonds of amalgamated companies, there was no transfer under Section 2(47) of the Income Tax Act and consequently no capital gains tax could be charged? Assessee's Contentions: The assessee argued that the receipt of shares, debentures, and bonds of amalgamated companies did not constitute a 'transfer' under Section 2(47) of the Act, and therefore, no capital gains tax was leviable. The assessee also contended that they were entitled to exemption under Section 47(vii) of the Act. The judgment notes that the matter was decided in favour of the assessee in view of earlier decisions and concessions made before the Tribunal. Revenue's Contentions: The judgment does not explicitly record the revenue's contentions. However, the reference questions imply that the revenue likely contested the assessee's claim for exemption and the interpretation of 'transfer' under Section 2(47) in the context of amalgamation.

Which sections of the Income-tax Act were involved?

Section 47(vii),Section 2(47)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 409 of 1992

For Approval and Signature:

Hon'ble MR.JUSTICE C.K.THAKKER and MR.JUSTICE M.C.PATEL ============================================================ 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?

-------------------------------------------------------------- MALLIKA SARABHAI TRUST NO 12 Versus COMMISSIONER OF INCOME-TAX -------------------------------------------------------------- Appearance: MR R.K.PATEL and B.D.Karia for Petitioner MR MANISH R BHATT for Respondent.

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

CORAM : MR.JUSTICE C.K.THAKKER and MR.JUSTICE M.C.PATEL Date of decision: 30/07/98

ORAL JUDGEMENT

The following questions are referred for the opinion of this Court:-

"Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was not entitled to exemption u/s 47(vii) of the Income Tax Act, 1961?"

"Whether, the Appellate Tribunal is right in law and on facts in holding that when the assessee received shares debentures and bonds of amalgamated companies, there was no transfer under section 2(47) of the Incometax Act and consequently no capital gains tax could be charged?"

The matter was decided in favour of assessee in view of the earlier decision by the authorities, including the Income Tax Appellate Tribunal, and the concession made before the Tribunal. In fact, in COMMISSIONER OF INCOME-TAX v. LEENA SARABHAI (N.CH.), 221 ITR 520, when the matter reached this Court, in view of peculiar facts and circumstances, the question was left unanswered. In these circumstances, this reference also stands disposed of unanswered. In the facts and circumstances, no order as to costs.

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