Commissioner of Income Tax vs Suresh Chandra Dayabhai

This is an application u/s 256(2) of the income tax Act, 1961 at the instance of the revenue and the following questions have been framed for calling a reference from the Tribunal: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law to hold that by handing over the vacant possession of the industrial plot to APE Bellies India Ltd. which was already allotted to them by the MPAKVN, the assessee has transferred any right or title for which he received a sum of Rs. 3,35,790?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the amount of Rs. 3,35,790 received by the assessee from APE Bailies India Ltd. was includible in the sale consideration for purposes of determining the capital gains u/s 45 of the income tax Act, 1961?

The Tribunal, after considering the matter, came to the conclusion that the sale of the plot of land which was allotted to the assessee by the MPAKVN to MPE Bellies India Ltd. was in the nature of a capital receipt and, accordingly, held it to be capital asset. The Department''s contention was that it was not capital asset as defined in section 48(2) of the Act, but it should be covered u/s 14(f) of the Act, from other sources.

We have considered the submissions of the learned counsel for the revenue and after considering the fact that this was a piece of plot allotted to the assessee for establishing a factory which was not established and the plot was sold to APE Bellies India Ltd. for a sum of Rs. 3,35,790, the nature of the income would be capital receipt and by no stretch of imagination could it be said to be income from other sources. This was an investment made by the assessee and instead of giving it back to the Government, it was passed on to the third party and the assessee secured an amount of Rs. 3,35,790 which was treated to be capital receipt and not income from other sources as defined u/s 14(f).

In our opinion, the view taken by the Tribunal appears to be justified and this is not a fit case in which statement of the case should be called for from the Tribunal. The reference application is, accordingly, dismissed.