Rajasthan H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the capital gains accrued to the assessee and was chargeable to tax in the asst. yr. 1976-77 ?

High Court Of Rajasthan : Jaipur Bench

CIT vs. Nirmal Kumar Soorana

Sections 2(47), 45(1)

Asst. Year 1977-78

Y.R. Meena & K.C. Sharma, JJ.

IT Ref. No. 29 of 1986

27th January, 2003

Counsel Appeared : Anuroop Singhi & J.K. Singhi, for the Applicant : J.K. Ranka, for the Respondent

JUDGMENT

BY THE COURT :

By this reference application under s. 256(1) of the IT Act, 1961, Tribunal has referred the following questions for our opinion : ” 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the capital gains accrued to the assessee and was chargeable to tax in the asst. yr. 1976-77 ? Whether, on the facts and in the circumstances of the case, the decision of the Tribunal that no books of account were maintained by the assessee for such capital gains and that this income from capital gains pertains to financial year ended on 31st March, 1976, being the previous year for asst. yr. 1976-77, is perverse ? Whether, on the facts and in the circumstances of the case, the Tribunal was right in excluding such capital gains from the total income of the assessee for the asst. yr. 1977-78 ?”

2. Narendra Kumar Soorana (Individual), Mannalal Soorana (Individual) and Nirmal Kumar Soorana (HUF) became partners in the firm and contributed cut and processed stones as follows : Narendra Kumar M/s Mannalal Nirmal Kumar 15.37 lacs 4-1-1976 Soorana Soorana & Co. The assessee Nirmal Kumar Soorana has contributed his capital on 4th Jan., 1976. The AO has treated this contribution of the capital as transfer within the meaning of cl. (47) of s. 2 of the IT Act, 1961 and taxed capital gain tax on such transfer. That amount was assessed in the asst. yr. 1977-78. The assessee claimed that the capital gain should be considered in the asst. yr. 1976-77, as assessee has not maintained any books of account, the previous year should be treated as year ended on 1st March, 1976. ITO did not accept and taxed this capital gain income in the asst. yr. 1977-78. In appeal, the CIT(A) uphold the view taken by AO. In appeal before the Tribunal, the Tribunal has confirmed the view taken by AO so far the capital contribution in the form of assets in the firm is a transfer, within the meaning of cl. (47) of s. 2 of the IT Act is concerned, however, the Tribunal has taken a view that when the assessee has not maintained the books of account, the previous year should be taken 1975-76 i.e., previous year ended on 1st March, 1976. Considering these admitted facts that the capital contribution has been treated as transfer within the meaning of cl. (47) of s. 2 of the IT Act and the fact that assessee has not maintained the books of account prior to this transfer i.e., on 4th Jan.,1976, in our view there is no infirmity in the order of Tribunal treating the previous year as 1975-76 when the assets were transferred on 4th Jan., 1976. In the result, we answer question Nos. 1 and 3 in affirmative i.e., in favour of the assessee and against Revenue. So far as the question No. 2 is concerned, we answer that the finding of the Tribunal is not perverse and that is also in favour of the assessee and against the Revenue.

8. Reference so made stands disposed of accordingly.

[Citation : 263 ITR 322]

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