S.C : Where, on the facts and in the circumstances of the case, and on a correct interpretation of various clauses in the purchase agreement dt. 4th Dec., 1978, entered into by the assessee with M/s Bharat Trading Corporation, Bombay, for purchase of a flat on 11th floor at 112A, Mittal Towers, Nariman Point, Bombay, the Tribunal was justified in holding that the assessee acquired an immovable property on 4th Dec., 1976, which had a marketable title, when, in fact, what the assessee acquired under the agreement was only (right) to purchase the immovable property on a future date subject to the fulfilment of conditions laid down in the said agreement ?

Supreme Court Of India

CIT vs. Vimal Lalchand Mutha

Sections 256(2)

S.P. Bharucha & D.P. Mohapatra, JJ.

Civil Appeal No. 7597 of 1993

15th November, 2000

ORDER

BY THE COURT :

The Revenue is in appeal against an order of a Division Bench of the High Court at Bombay rejecting its application under s. 256(2) of the IT Act. The questions, which the Revenue sought reference of, read thus : “(a) Where, on the facts and in the circumstances of the case, and on a correct interpretation of various clauses in the purchase agreement dt. 4th Dec., 1978, entered into by the assessee with M/s Bharat Trading Corporation, Bombay, for purchase of a flat on 11th floor at 112A, Mittal Towers, Nariman Point, Bombay, the Tribunal was justified in holding that the assessee acquired an immovable property on 4th Dec., 1976, which had a marketable title, when, in fact, what the assessee acquired under the agreement was only (right) to purchase the immovable property on a future date subject to the fulfilment of conditions laid down in the said agreement ? (b) Whether, on the facts and in the circumstances of the case, and in view of the admitted position that the said flat was given possession to the assessee by the builders M/s Bharat Trading Corporation only in June, 1981, after the final payments were made, the Tribunal was justified in law in holding that the assessee owned an immovable property on 4th Dec., 1978, by virtue of entering into an agreement for purchase of the flat and this property had a marketable title and transferable as such ? (c) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding and directing the ITO that the capital gains arising out of the sale of a flat at 112A, Mittal Towers, Nariman Point, Bombay, on 28th April, 1983, to M/s Chanral Uttamchand, Bombay, as long-term capital gains in the asst. yr. 1984-85 ?” Learned counsel for the Revenue fairly states that it would suffice if the only question that was considered was question (c). The High Court briefly set out the facts and held that the Tribunal had rightly come to the conclusion that the assessee’s capital gains were long-term capital gains and that, in view of these facts and the findings recorded by the Tribunal, there was no statable question of law. We are not inclined to agree with the view taken by the High Court. A question of law does arise in question (c) in that it relates to the correct interpretation to be placed upon the agreements that were entered into by the assessee. We think, therefore, that the order under challenge must be set aside and the Tribunal directed to refer question (c) to the High Court for its opinion, after drawing up a statement of case. Order on the appeal accordingly. No order as to costs.

[Citation : 248 ITR 6]

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