TMI Blog1981 (7) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... d had claimed that it was a capital receipt not liable to income-tax. The assessee contended that there was an agreement dated the 15th October, 1959, to which we, shall refer later, between the assessee and three others, viz., Sri Banwarilal Pasari, Sri Purushottamdas Pasari and Sri Sankarlal Pasari in respect of the purchase and sale for profit of permises No. 12-A and 12-B, Russel Street, Calcutta. It would be relevant in view of the contentions that have been raised before us to refer to some of the clauses of the agreement. The agreement, after setting out the names of the parties, inter alia, provided as follows : "That the first, second, third, and fourth parties will purchase the properties known as 12-A and 12-B, Russel Street, Calcutta, at or for a sum of Rs. 8,00,000. " It may be mentioned that Dhanraj Dugar who is named as the party of the fourth part is the assessee before us. Other relevant clauses of the agreement are as follows : " That money required for the purchase of the properties, registration and other expenses and for the developments, etc., will be provided by the parties as and when required interest whereon will be allowed at the rate of 6 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed reliefs as follows : (a) a declaration that the plaintiff and defendants Nos. 1 to 3 were each entitled to one-fourth share in the said premises Nos. 12-A and 12-B, Russel Street, Calcutta, as provided in the agreement dated October 15, 1959; (b) partition of the said premises in accordance with the shares of the parties therein as provided in the said agreement, and separate possession ; (c) if necessary specific performance of the said agreement dated October 15, 1959, or so much thereof as was appropriate, and damages or compensation in addition to specific performance; (d) possession ; and other consequential reliefs. After protracted negotiations, terms of settlement were put in on June 2, 1971. By the said terms of settlement, the said suit was settled. The said terms of settlement, inter alia, contained the following terms : " 2. The defendant No. 2 agree to pay to the plaintiff a sum of Rs. 1,00,000 (rupees one lakh) on or before the signing of these terms of settlement and the plaintiff has agreed to accept the said sum in full and final settlement of all his claims and costs which are the subject-matter of this suit. 3. It is declared that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of the property at 12-A 12-B, Russel Street, Calcutta, and for the service as broker of land and buildings the assessee had been paid during the accounting period his remuneration amounting to Rs. 1,00,000. As such the said money should be termed as the assessee's income from business as broker in land and buildings. Since the aforesaid money did not represent any receipt of capital nature in the hands of the assessee, the question of any capital gains did not arise." The ITO further observed that the terms of the settlement appeared to be a clever ruse to divert the attention of the Revenue from the substance of the real transaction which might have been a collusive one though later on this finding was not pursued. There was an appeal before the AAC. The AAC, in substance, also agreed with the views of the ITO and dismissed the assessee's appeal. There was a further appeal before the Tribunal. The Tribunal observed after setting out the facts, as mentioned hereinbefore that the first question that had to be decided was whether the receipt in question could be said to arise out of the normal brokerage business of the assessee. The Tribunal noted that the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that the sum of Rs. 1,00,000 was not liable to be taxed as income which arose in the normal course of the assessee's business ? (ii) If the answer to question (i) be in the affirmative, then, whether on the facts and in the circumstances of the case and on a proper interpretation of the terms of settlement arrived at in the suit filed by the assessee, the Tribunal was right in holding that no capital gains arose in view of section 47(ii) of the Income-tax Act, 1961 ?" But the Tribunal had thought it right to refer the question, as we have indicated before. There is a finding of fact that the income, in question, did not arise from the assessee's normal course of business. That finding of fact has not been challenged. Furthermore, we find that, in the facts and circumstances of the case, the Tribunal had ample materials and had considered all the relevant materials to come to that finding of fact. If that is the position, then the sum could not be taxed as a revenue receipt in the facts and circumstances of this case. On behalf of the Revenue, however, our attention was drawn to s. 2(47) of the I.T. Act, 1961, in aid of the submissions that even if the receipt in quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 2(47) of the I.T. Act, 1961, the transfer in relation to a capital asset included the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under the law. This definition gave an artificial extended meaning to the term " transfer " by including within its scope two types of transactions which would not ordinarily constitute transfer in the accepted connotation of that word, viz., relinquishment of capital asset and extinguishing any of the rights in it. In the case before the Bombay High Court, having regard to the particular mode employed by the assessee and the continuing partners to effect and bring about the retirement of the assessee from the partnership, the Bombay High Court felt that the transaction would have to be regarded as amounting to transfer. But the facts in that case and in the instant case are entirely different. Similar or more or less were the facts in the other decision of the Bombay High Court in the case of CIT v. H. R. Aslot [1978] 115 ITR 255, where, following the ratio of the previous decision of the Division Bench of the Bombay High Court, it was held that there was trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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