High Court Of Rajasthan : Jaipur Bench
CIT vs. Vimal Kumar Surana
Sections 263
Asst. Year 1977-78
Y.R. Meena & Shashi Kant Sharma, JJ.
IT Ref. No. 35 of 1985
23rd February, 2004
Counsel Appeared : Anuroop Singh for J.K. Singhi, for the Revenue : N.M. Ranka with Rajkumar Yadav, for the Assessee
JUDGMENT
By the court :
The following question has been referred for the opinion of this Court: “Whether, on the facts and in the circumstances of the case, the assessment order by the ITO for the asst. yr. 1977-78 could not be revised by the CIT under s. 263 of the IT Act, 1961, on the ground of being erroneous and prejudicial to the interests of the Revenue inasmuch as the long-term capital gain on the contribution of capital in the shape of cut precious stones valued at Rs. 15,32,000 had accrued in the asst. yr. 1976-77 and not in the asst. yr. 1977-78, the income by way of deemed capital gain was assessable for previous year on financial year basis?” The assessment year involved is 1977-78. For the year, the assessee-HUF filed an income-tax return on 29th June, 1977 declaring the income at Rs. 44,969 including therein, inter alia, income from interest from M/s Mannalal Nirmal Kumar Surana & Co. The income was assessed accordingly. Thereafter on perusal of the record, CIT has issued the order under s. 263 of the IT Act to show-cause as to why the order of the ITO should not be revised as that order is prejudicial to the interest of the Revenue so far as the investment is made by the assessee in the firm namely, M/s Mannalal Nirmal Kumar Surana & Co. and become a partner. After show-cause notice and considering the reply, the CIT has taxed the contribution made by the assessee, in the form of precious stones as transfer within the meaning of s. 2(47) of the IT Act and held that it is liable to capital gain tax.
In appeal before the Tribunal, the issue was raised that, as the transfer was made on 4th Jan., 1976, therefore, the relevant year is 1976-77 and not 1977-78. The Tribunal has allowed the claim that, as there was a transfer on 4th Jan., 1976, the relevant assessment year is 1976-77 and not 1977-78. While allowing the claim of the assessee, the Tribunal has taken the view that so far precious stones contribution is concerned, no books of accounts were maintained, therefore, the date, 4th Jan., 1976 be taken as relevant date for taxing the capital gain tax. In that case, the capital gain cannot be taxed in the asst. yr. 1977-78. The relevant year for that is 1976-77. In the result, we order accordingly.
[Citation : 269 ITR 288]
