Commissioner of Income Tax vs Ramanbhai B. Amin

B.K. Mehta, J.—At the instance of the Commissioner, the following question is referred to us for our opinion:

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the contribution of joint stock made by the assessee as capital to the firm Niraru Associates did not within the meaning of section 2(47) of the income tax Act, 1961 tantamount to transfer in relation to the said joint stock and that, therefore, there arose no profits and gains computable under the head ''Capital gains''?

For the reasons stated in the judgment and order of the Division Bench of this Court in Commissioner of Income Tax, Gujarat-I Vs. Kartikey V. Sarabhai, , we must answer the question referred to us in this reference at the instance of the Commissioner in the negative, i.e., in favour of the revenue and against the assessee with no order as to costs.

On behalf of the assessee, an oral application has been made for a certificate of fitness for appeal to the Supreme Court. We are of the opinion that since the consensus has been reached between the assessee and the revenue to abide by the decision of the Supreme Court in appeal preferred by Kartikey V. Sarabhai v. CIT from the aforesaid decision of this Court, being Civil Appeal No. 1777 of 1981 [reported in [1985] 23 Taxman 14W], it may be necessary to grant leave to appeal which, however, is not pressed for by the present assessee, in view of the consensus. Oral application, therefore, stands disposed of accordingly. The concensus is that the parties will abide by the decision of the Supreme Court in the aforesaid appeal and will not object to the Tribunal adjusting its order u/s 260(1) of the income tax Act, 1961, in light of the decision of the Supreme Court, and the revenue shall not enforce the demand till the Tribunal adjusts according to the decision of the Supreme Court. Liberty reserved in case of difficulty.