1984 (6) TMI 85 - AT - Income Tax

Summary

Issues:
1. Whether the destruction of a building due to natural calamity constitutes a capital loss for the assessee.
2. Whether there was a 'transfer' within the meaning of section 2(47) of the Income-tax Act, 1961, in the case of the building collapse.
3. The relevance of consideration in determining the existence of a transfer in case of extinguishment of right in a property.
4. The impact of previous court decisions on the current case and the necessity of following the law laid down by a High Court.

Analysis:
1. The case involved the collapse of a building owned by the assessee due to heavy rain, resulting in a claimed capital loss. The Income Tax Officer (ITO) rejected the claim, stating that there was no transfer as per section 2(47) of the Act.
2. The assessee appealed to the Commissioner (Appeals), who referred to Gujarat High Court decisions emphasizing the need for consideration to constitute a transfer. However, he also noted that in cases of total destruction without consideration, the assessee could still claim a capital loss.
3. The revenue appealed against the Commissioner's order, citing Gujarat High Court decisions requiring consideration for a transfer to occur. The Tribunal considered the case law, including Supreme Court decisions, and concluded that in the absence of consideration, there was no transfer, leading to a capital loss for the assessee.
4. The Tribunal highlighted the importance of following the law laid down by a High Court, even if from a different state, in the absence of contrary decisions. Ruling in favor of the revenue, the Tribunal reversed the Commissioner's order and upheld the ITO's decision, emphasizing the relevance of previous court decisions in determining the outcome of the case.