The Commissioner Of Income Tax v. Shri G. N. Ghorpade, Ichalkaranji

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICGTION INCOME TAX REFERENCE NO. 736 of 1987 The Commissioner of Income Tax ... Applicant. vs. Shri G. N. Ghorpade, Ichalkaranji ..... Respondent Mr. Ashok Kotangale, Sr. Counsel with Mr. D. A. Dubey i/b. K. C. Sidhwa for applicant. Mr. Arun Sathe for Respondent. CORAM: V.C. DAGA AND A.S. AGUIAR JJ.Date: 19[th] July, 2005. P. C.: 1. By this reference under section 256 (1) of the Income Tax Act ,1961, the Income Tax Appellate Tribunal Pune, in ITA No.212/PN/81 for the Assessment Year 1971-72, has referred thefollowing questions of law for the opinion of this court: “Whether on the facts and circumstances of thecase, the Tribunal was justified in law in holdingthat capital gains of Rs.1,86,480/- arising from theacquisition of property R.S. 610. Ichalkaranji, is not liable to tax in the hands of the assessee althoughownership of the property is shown in the 7/12extract of the records of rights in the name ofassessee and when the competent court under theLand Acquisition Act, decided the issue ofownership in favour of the assessee who himselfhas claimed the entire compensation during theacquisition proceedings?” ( The above question is slightly modified for the sake ofclarity.) 2. When the appeal was heard by the Tribunal, the Tribunal had on itsrecord the order passed by the Court of Assistant Judge, Kolhapur,in Land Reference Case nO.35 of 1976, arising out of section 30 ofthe Land Acquisition Act for the apportionment of the amount ofcompensation. As such Tribunal was expected to make the saidorder a part of the statement of the case while referring the matterfor the opinion of this court. Since the said order was not forwardedby the Tribunal along with the statement of the case; the learnedcounsel for the assessee was called upon to produce the said order.Accordingly the xerox copy thereof is produced by the learnedcounsel for the assessee. The same is taken on record, for deciding this reference. The facts: 3. The relevant facts giving rise to this reference are that the ITOcalculated capital gains in the sum of Rs.1,86,480/- arising out of theportion of the property bearing R. S. no. 610, corresponding to CitySurvey No. 5963 situate at Ichalkaranji ; which was acquired by theState Government, under the provisions of Maharashtra RegionalTown Planning Act, for the public purpose. calculated capital gains in the sum of Rs.1,86,480/- arising out of theportion of the property bearing R. S. no. 610, corresponding to CitySurvey No. 5963 situate at Ichalkaranji ; which was acquired by theState Government, under the provisions of Maharashtra RegionalTown Planning Act, for the public purpose. 4. A Notification under section 126(4) of the Maharashtra RegionalTown Planning Act for that purpose was published in the OfficialGazette on 27.9.1973. After complying with requirements of MRTPAct, the Special Land Acquisition Officer, who was empowered withthe functions of the Collector passed an award awardingcompensation on 16.10.1976. Under this award, he determined atotal amount of compensation in the sum of Rs.1,34,034/- includingsolatium and damages on account of severance etc. The LandAcquisition Officer during the course of his inquiry, could not resolvethe conflicting claims of opponent nos. 1 and 2, i.e., dispute betweenson and mother; since mother (opponent no.2 ) Smt. Anubai V. 4. A Notification under section 126(4) of the Maharashtra RegionalTown Planning Act for that purpose was published in the OfficialGazette on 27.9.1973. After complying with requirements of MRTPAct, the Special Land Acquisition Officer, who was empowered withthe functions of the Collector passed an award awardingcompensation on 16.10.1976. Under this award, he determined atotal amount of compensation in the sum of Rs.1,34,034/- includingsolatium and damages on account of severance etc. The LandAcquisition Officer during the course of his inquiry, could not resolvethe conflicting claims of opponent nos. 1 and 2, i.e., dispute betweenson and mother; since mother (opponent no.2 ) Smt. Anubai V. PGhorpade, was claiming entire amount of compensation. Smt.Anubai was contending that the land acquired was given to her forher maintenance under will, and, as such under section 14 of theHindu Succession Act, 1956, she became the absolute ownerthereof. The Land Acquisition Officer finding himself unable todecide the issue of apportionment of the amount of compensation,made a Reference to the Civil Court under section 30 of the LandAcquisition Act, registered as Land Reference No. 35 of 1976. Itcame to be decided by the judgment and order dated 25[th]November 1980 which became final and conclusive for want offurther challenge. The contention of the mother Smt. Anusayabaiwas upheld and she was held entitled to claim entire amount ofcompensation. In this view of the matter the contention of theassessee that the capital gain could not have been taxed in hishands or could not be assessed in his hand in the Assessment Year1971-72 was rightly upheld by the Tribunal. 5. The assessee became the owner of the property in the year 1976,that too by virtue of the sale deed obtained by him from his motherSmt. Anubai. In the Assessment Year 1971-72 he was not the owneras such no capital gain could be taxed in his hands. that too by virtue of the sale deed obtained by him from his motherSmt. Anubai. In the Assessment Year 1971-72 he was not the owneras such no capital gain could be taxed in his hands. P 6. In the above view of the matter, the Tribunal was perfectlyjustified in holding that the Respondent assessee was not liable topay capital gains tax. The question referred is, thus, answered inthe affirmative i.e., in favour of the assessee and against theRevenue. justified in holding that the Respondent assessee was not liable topay capital gains tax. The question referred is, thus, answered inthe affirmative i.e., in favour of the assessee and against theRevenue. Reference stands disposed of with no order as to costs. (V. C. DAGA J. ) (A. S. AGUIAR J.)