TMI Blog1997 (3) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the assessee as well as the learned Departmental Representative. The counsel for the assessee submitted that the proceedings initiated under section 147 were bad in law because there was no material or information with the Assessing Officer on the basis of which it could be said that he had reason to believe that any income had escaped assessment. Inviting our attention to the reasons stated by the Assessing Officer as well as the CIT(A) for initiating the proceedings under section 147, he submitted that the so-called information received from the Deputy Director of Income-tax (Exemptions) by way of an order under section 144A passed in the case of Cotton Textiles Export Promotion Council was neither an authenticated information nor had a direct nexus with the formation of belief. Elaborating this aspect, on the basis of his arguments on merits; he submitted that the authorities below have initiated reassessment proceedings solely on the basis of the opinion expressed by the DDI(E) who was neither competent to interpret the law nor had jurisdiction to determine the market value of the Flat. He further submitted that the words used in the information are as tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). ** ** ** Explanation 2 : For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- (a) ** ** ** (b)where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; 5. Provisions as extracted above are somewhat similar to the old provisions of section 147(a) and 147(b) and therefore the interpretation of the words reason to believe made under those provisions applie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords is satisfied . The belief entertained by the Assessing Officer must not be arbitrary or irrational. It must be reasonable or in other words, it must be based on reasons which are relevant and material. This view finds support from the decision of Hon ble Supreme Court in the case of Ganga Saran Sons (P.) Ltd. (supra). It is also true that the formation of belief is only possible on the basis of certain material. It is not enough, however, for the Assessing Officer to have the material in his possession. What is required is that he must perform further necessary mental act of accepting material and information as reliable and forming the belief that they can be acted upon. If such necessary mental act on the part of the Assessing Officer is missing, then it cannot be said that he had reason to believe . This view of ours finds support from the decision in Ramnarain Bhojnagarwalla v. ITO [1970] 77 ITR 653 (Cal.). The formation of the required belief or to have reason to believe is a condition precedent and the fulfilment of the condition is not a mere formality, but it is mandatory, and the failure to fulfil this condition would vitiate the whole proceedings. So, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was forwarded. In the said intimation, it was stated that the said Council had sold a flat owned by them to the appellant who was the executive director for a sum of ₹ 2,31,000. It was also mentioned that the fair market value of the flat on the date of transfer would not be less than ₹ 35 lakhs and as such a concession or benefit had been passed on to the appellant by the employer-council. The Assessing Officer has stated that on account of the said intimation and on the basis of facts it was a clear case wherein the appellant had got a perquisite which was liable to be taxed and it had escaped assessment. Accordingly, action under section 147 was taken. From the aforesaid facts noted by the CIT(A), it is clear that proceedings under section 147 have been initiated on the basis of the so-called information received from DDI(E) through his order under section 144A passed in the case of the assessee s employer-council. If we analyse the information under reference, we have no hesitation to come to the conclusion that it is nothing but an assumption of some individual person who had neither the jurisdiction to arrive at a finding that any perquisite had accrued to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material coming to the knowledge of the Assessing Officer and formation of belief. It is not any and every material, however, vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief as far as the facts of the present case are concerned, we are of the opinion that this direct nexus or live link is missing absolutely and therefore the Assessing Officer could not have reason to believe that any income had escaped assessment on the basis of information received from the DDI(E). This view finds support from the decisions reported in Lakhmani Mewal Das case (supra), 481, Acchut Kumar S. Inamdar v. P.R. Hajarnavis [1981] 132 ITR 331 (Bom.) and Nirmalkumar Ashokkumar v. K.V. Gopi, ITO [1991] 187 ITR 329 -31-32 (Bom.). 8. It is also settled law that if there is no rationale and intelligible nexus between the reason and belief so that on such reasons no one properly instructed on facts and law could reasonably have the belief; the conclusion would be inescapable that the Assessing Officer could not have reason to belief and in such cases, the notice issued by the Assessing Officer has to be struck down. As far as assessee s case is conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b initio. Ground Nos. 3 to 9 12. All these grounds of appeal relate to the taxability of the perquisite amounting to ₹ 32,34,000 in the hands of the assessee. The counsel for the assessee as well as the learned D.R. advanced their consolidated arguments against all these grounds and hence these grounds are taken together. 13. We have heard the counsel for the assessee as well as the learned D.R. The assessee s counsel, first of all, submitted that the transfer of the flat in assessee s name was not because of his being employee of the Cotton Textiles Export Promotion Council (hereinafter referred to as Council ) rather was a commercial transaction on the basis of a verbal agreement for sale of property arrived at between the assessee and the Council in the year 1981. To support this proposition, the counsel for the assessee referred to item No. 6 of the Council s Resolution dated 30th August, 1988, assessee s reply before the Assessing Officer dated 31st March, 1994 (especially para 3 at page 6 of the paperbook) placed at page Nos. 20 to 29 and pages 4 to 7 of assessee s paperbook and Affidavit of Mr. R.S. Mehra. From the contents of these documents, he submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under reference reads as under :- (6) Chairman reported to the Committee the following :- The Committee is aware that Shri M.M. Ratnam joined the Council in 1965 and was posted to Frankfurt as the Council s officer in Europe. After 12 years stay in Frankfurt and Manchester, when he was recalled to Bombay in 1977, he requested for a permanent accommodation. The Council had asked him to purchase its flat, New Miramar Co-op. Housing Society at the cost price of ₹ 2,31,000 which was comparable to the market price then. Shri Ratnam asked for some time as he did not wish to block up his funds so soon after shifting to India with his family. He has been living in this flat since the time he returned to India in 1977. Subsequently when he asked the then Chairman Shri R.S. Mehra in 1981 to transfer the flat to him, Shri Mehra gave a firm commitment to Shri Ratnam that the flat will be transferred to him. Chairman said that he consulted the Seniors and reported that they are in agreement to transfer the flat at cost to Shri Ratnam. The Committee endorsed the decision of the Seniors and agreed to transfer the Council s flat in New Miramar Co-op. Hsg. Society to Shri Ratn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s name was not an ordinary commercial transaction, but was in consideration of the assessee being Council s employee. 16.1 Now, we proceed to discuss the relevant provisions under which any perquisite could have accrued in assessee s hands as a result of the transaction under reference and first of all we think it necessary to re-produce the provisions of section 17(2) as under :- perquisite includes - (i)the value of rent-free accommodation provided to the assessee by his employer; (ii)the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer; (iii)the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases :- (a)by a company to an employee who is a director thereof; (b)by a company to an employee being a person who has a substantial interest in the company; To analyse the provisions of section 17(2) first it is necessary to discuss the meaning of perquisite . The ordinary meaning of perquisite is defined in Webster s New International Dictionary, inter alia, as a gain or profit incidentally made from employment in addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees-Employer s Contribution Whether assessable as income of employee - Test of assessability - Contingent interest whether sufficient - Indian Income-tax Act, 1922 S. 7(1). Contributions made by an employer to provide pensionary or deferred annuity benefits to employees cannot be taxed in the hands of the employee under section 7(1) of the Indian Income-tax Act, 1922, unless a vested interest therein accrues to the employees. The English and Scottish Joint Co-operative Wholesale Society Ltd. had established a superannuation scheme for the benefit of a certain class of its employees. Every such employee became a member of the scheme as a condition of employment. Under the terms of the scheme, which were incorporated in a trust deed and certain rules, the Society had to contribute every month one-third of the premium payable by each employee, who paid the remaining two-thirds for effecting a policy of insurance. The Society as trustees had to take out policies of insurance securing a deferred annuity upon the life of each employee equivalent to the pension to which he would be entitled on his attaining the age of superannuation. If an employee left the service of the Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices of 26 years is mentioned. We are, therefore, of the opinion that it is a case of ordinary commercial transaction as is evidenced by the various facts on record. In the year 1977, on the desire of the assessee, the Council had offered to sell the flat to him for a price of ₹ 2,31,000 which was the actual price at that time and, therefore, it cannot be assumed that the offer to sell the flat to the assessee in 1977 was as a result of his being the Council s employee or was at a concessional rate. Since this offer remained pending till 1981 and when the assessee conveyed his acceptance, the Council, though could have retracted its offer, but accepted the acceptance given by the assessee, and, therefore, the contract was complete in the year 1981 itself. These being the facts, we are unable to agree with the DR that it was not an ordinary commercial transaction. The assessee was not only the employee of the Council. So, had the sale of the flat to the assessee been because of his being the employee, then, the other employees could have also demanded such a concession; and there is nothing on record or the revenue has not brought anything to our knowledge, that such a demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating it. Section 4 : The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete,- as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of acceptor; as against the acceptor, when it comes to the knowledge of the proposer. The communication of a revocation is complete, - as against the person who makes its, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge. Section 5 : A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. Section 6 : A proposal is revoked- (1)by the communication of notice of revocation by the proposer to the other party; (2)by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee s case from the very beginning was that the Council had offered to sell the flat to him in the year 1977 for a consideration of ₹ 2,31,000 which was the cost price at that time. But the assessee did not convey his acceptance at that time as he did not want to block his funds. The assessee, however, conveyed his acceptance to purchase the flat for a consideration of ₹ 2,31,000 in the year 1981 which was accepted by the then Vice-Chairman of the Council Shri R.S. Mehra who gave a firm commitment that the flat will be transferred to the assessee at the offered price and ultimately the flat was transferred in assessee s name in the year 1988. 18. It is well-settled that if a fact cannot be proved from the existing material, then, it can be proved by way of an affidavit. The assessee has tried to prove the existence of a verbal agreement of the sale of the flat which was complete in the year 1981, before the lower authorities by his own explanation as well as by way of copy of Council s resolution. Before the Tribunal, the assessee has filed the copy of those documents as well as the affidavit of Mr. R.S. Mehra, the contents of which are as under : (1)Resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a firm commitment to Shri Ratnam to transfer the flat to him. I say that before I gave such a commitment to Shri Ratnam I had consulted my colleagues of the Committee of Admn. and had obtained their consent for the same. (9) That the said flat was transferred to him for ₹ 2,31,000 as agreed earlier in the year 1988-89. (10)Solemnly affirmed at Bombay this 10th day of April, 1996. Sd/- R.S. Mehra. After analysing the contents of the aforesaid documents, in the light of provisions of Contract Act, we are of the opinion that the agreement/contract for sale of the flat for a consideration of ₹ 2,31,000 was complete in the year 1981 when Mr. R.S. Mehra accepted the acceptance given by the assessee and made a verbal commitment on behalf of the Council to transfer the flat in assessee s name at the price which was offered by the Council in the year 1977. In our opinion, the Council, by its resolution passed in 1988, had done nothing new, but had only fulfilled the terms of verbal contract/agreement for sale of the flat to the assessee which was arrived at between the Council (through its then Chairman, Shri R.S. Mehra) and the assessee in the year 1981, as a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to entertain a belief contrary to the one canvassed and proved by the assessee. In view of the above conclusions, we are of the opinion that the value of the perquisite, if any, has to be determined by comparing the consideration with the market value of the flat in the year 1981 - when the contract was complete and not with the market value of the year 1988. 19. Even otherwise and if for the sake of arguments it is assumed that there was no contract at all in the year 1981 then also, as already held by us; no perquisite had accrued in assessee s hands and, therefore, existence/absence of a contract in the year 1981 is of no importance. 20. The next question for our consideration is, that if at all, any perquisite had accrued in the assessee s hands, then what was its value. The counsel for the assessee has submitted that there being no provision for determining the value of such type of perquisite, so the market value could have been determined on the basis of provision under the Wealth-tax Act, according to which the market value even in the year 1988 was less than the consideration paid by the assessee. The ld. D.R. on the other hand supported the value determined by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance tax :- Section 209(1). The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3) be computed as follows, namely- (a)where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year; (d)the income-tax calculated under clause (a) or clause (b) or clause (c ), shall in each case, be reduced by the amount of income-tax which would be deductible or collectible at source during the said financial year under any provisions of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable. From the provisions of sub-clause (d) of section 209(1) extracted above, it is very clear that to arrive at the amount of advance tax payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. PF withdrawals 1,85,000 PF loans 43,000 Savings 3,000 2,31,000 The above indicates that the assessee have placed on the record of the Assessing Officer, the fact of he having purchased the flat for a total consideration of ₹ 2,31,000 and that he has used the same for his self-occupation and for this reason the income from the said property has been shown as Nil . 2. The grounds of appeal as raised by the assessee before the CIT(A) had not touched upon this aspect of assessee having furnished the said information along with its return of income or during the assessment proceedings that were completed at the first stage. It, therefore, appears that the said statement of income was perhaps furnished for the first time during the reassessment proceedings. Even before us, the assessee had not stated in its grounds of appeal that the said information was provided at the first instance, i.e., during the course of original assessment and thereby the information as was necessary to be pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a promise. Consideration has been defined as at the instance of the promissor, the promisee has done or has abstained from doing or does or abstains from doing, or promises to do or to abstain from doing something such act or abstinence or promise is a consideration for the promise. The term Agreement has been defined to mean as every promise and every set of promises forming the consideration for each other. The term reciprocal-promise has been defined to mean, promise which form the consideration or part of the consideration for each other or with reciprocal promises. A Contract has been defined to mean an agreement which is enforceable by law. A Voidable Contract has been defined to mean that an Agreement which is enforceable by law at the option of one or more of the parties thereto but not at the option of the other or others. A Void Contract has been defined as one which ceases to be enforceable by law. The above definitions have been brought out only to highlight that the term intention or proposal is not the same as promise. This is necessary to appreciate in the circumstances of the case. In 1977, the employer had offered to sell the flat f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goes to show that the employer had sold the property at a price to its employee because of the employer-employee relationship only. The assessee having received the property at a lesser value than its true market value, it is obvious that the assessee had received some benefit from his employer. The amount paid by the employee being lower than the market value it is equivalent to the employer providing the benefit at a concessional rate. Therefore, to that extent there is an element of perquisite which has earned by the assessee which is taxable under section 17(2)( iii). 5. Coming to the aspect of the valuation of the benefit, the plea of the assessee that the property is one which is encumbered because of it being a rent out property is not acceptable preposition because the tenant is none other than the employee himself. Further, the employee is occupying the property owned by the employer by virtue of employment, and if the employment ceases, the employee cannot make any claim of tenancy on the property owned by the employer. Therefore, the said property is like any other property, i.e., lying vacant and possession of which could be completely given to the buyer. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Promotion Council since 1965. He had been posted to Frankfurt, Manchester, for about twelve years, i.e., till 1977 when he was recalled to India to look after the Bombay Office. Shri Ratnam on assuming his charge in India required an accommodation for his residence. It seems that The Cotton Textiles Export Promotion Council had offered to sell Flat No. 24-B, Miramar, 3, Nepean Sea Road, Mumbai-36, to the assessee in consideration of ₹ 2,31,000 in the year 1977. This flat had been purchased by The Cotton Textiles Export Promotion Council from one Shri Viswanath, the then Director General of the Council, in November 1976. Shri Ratnam expressed financial constraints in respect of payment of ₹ 2,31,000. Thus, the flat was not transferred to Shri Ratnam in the year 1977. It is claimed by the assessee that in the year 1981 he had requested The Cotton Textiles Export Promotion Council to transfer the flat to the assessee. Shri R.S. Mehra in his affidavit dated 10th April, 1996, filed before the Tribunal for the first time, has stated that a firm commitment was made by him to Shri Ratnam in 1981 for the transfer the flat in 1981. He has further stated that the Council had fel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration paid by the assessee was adequate. 5. The Assessing Officer referred to the order under section 144A dated 31-12-1991 in the case of The Cotton Textiles Export Promotion Council and quoted from page-6. It is recorded that there was not any agreement of sale in respect of flat sold to Mr. Ratnam prior to 1988 when the flat was actually transferred. Thus, it is apparent that there was no legal act which was the cause of low sale price. 6. The Assessing Officer with reference to the claim of the assessee that the transfer did not take place in consideration of his services to the Council, has referred to the published accounts in the case of The Cotton Textiles Export Promotion Council from where it is clear that the flat was transferred to the assessee as he was the Executive Director of the Council. The Assessing Officer has quoted from para-5 of the order under section 144A in the case of employer, i.e., CTEPC in view of the valuable services rendered by Mr. Ratnam over a period of about 26 years the provision of residential accommodation is allocated. Again the Assessing Officer quoted from para-4 page 4 of the said order as under : The only argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de order dated 28-11-1995 upheld the action of reopening as well as valuing the perquisite in respect of sale of flat to the assessee by the employer at ₹ 32,34,000. 9. The assessee appealed to the Tribunal and the learned Judicial Member proposed an order in which proceedings under section 147 were held to be void ab initio. It was further held that by reason of sale of flat No. 24-B, Miramar, 3, Nepean Sea Road, Bombay by the Council to the assessee in 1988 no perquisite had accrued to the assessee and, therefore, no amount was assessable on that account in the assessment of the assessee in assessment year 1989-90. The learned Judicial Member while coming to the aforementioned conclusion has also held that the transfer of the flat to the assessee was ordinary commercial transaction and that there was no evidence on record to prove that the flat was transferred in assessee s name in pursuance of the contract of service. The ld. Judicial Member has also referred to the provisions of the Contract Act to come to the conclusion that the contract between the assessee and his employer was completed in the year 1981. He has, accordingly, held that value of perquisites, if any, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the occupation of the property by the assessee was by reason of the employment and the property was that like any other property lying vacant possession of which could be given to the prospective buyer. He has, accordingly, held that the value of the property was to be determined as it would fetch in the open market. 13. The ld. Accountant Member has, however, not confirmed the valuation of perquisite at ₹ 34,64,000 as, according to him, it was not based on any sale incident of similar property. He has, accordingly, directed the Assessing Officer to limit the value of the perquisite by considering the actual sale transaction and after providing an opportunity to the assessee. Referring to the contention raised on behalf of the assessee regarding modes of valuation, the ld. Accountant Member has held that since the property was not encumbered the various modes of valuation referred to on behalf of the assessee were inapplicable. He has further held that the market value of the property was to be determined as it would fetch in the open market without considering any encumberance. 14. I have heard the rival contentions and perused the records. The learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra). Relying on the decision of the Bombay High Court in the case of Jehangir Mahomedali Chagla v. M.V. Subrahmanian, Addl. First ACED [1985] 155 ITR 637, the ld. counsel contended that the valuation of the property shall have to be determined with reference to the rateable value in the identical manner as for purpose of wealth-tax. When that is done, according to the ld. counsel, the value of the property works out to far less than ₹ 2,31,000. It was, accordingly, contended that no perquisite value was assessable under section 17(2)(iii) as rightly held by the ld. Judicial Member. 15. The ld. Departmental Representative, on the other hand, sought to support the decision of the learned Accountant Member. It was contended that Shri R.S. Mehra was not competent to contract on behalf of the Council and as such his assurance to the assessee in 1981 that the property would be transferred to the assessee was of no consequence. Referring to the resolution dated 30-8-1988 passed by The Cotton Textiles Export Promotion Council, the learned Departmental Representative pointed out that the Council is constituted of leading businessmen and assessee is to ex-Executive Director. Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be adopted. It was contended that the W.T. Rules are provided for the purposes of assessment under the W.T. Act and for purposes of assessment of the benefit granted to the assessee, the fair market value has got to be assessed as per section 2(22) of the Income-tax Act, 1961. The ld. Departmental Representative further contended that the transaction by the Council with the assessee was not a commercial transaction. No offer was made to any other person for the sale of the flat. The offer to the assessee by reason of being a senior executive of the Council and as such the fair market value was assessable as perquisite under section 17. 17. In counter reply, the ld. counsel for the assessee has referred to the Commentary of Kanga Palkhivala in support of the contention that there is an integrated scheme of taxation under various Acts and, therefore, it was contended that in the absence of rules under Income-tax Act for determination of the fair market value, the W.T. Rules are required to be applied. It was further contended that assessee had been offered property in 1977 at a price at which it had been purchased in that year. In response to a query from the Bench, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd when consideration of ₹ 2,31,000 was paid is not well founded. Now let me consider as the whether the benefit was conferred to the assessee in the year 1981. Shri R.S. Mehra in his affidavit vide para-6 has admitted that in the year 1981, the Council felt that it was advisable to defer the transfer. Para-6 of the aforementioned affidavit may be quoted below : That in the year 1981, Shri M.M. Ratnam requested for transfer of the said flat. A firm commitment to transfer the said flat to Shri Ratnam was given in 1981. However, the Council felt that it should be advisable to defer the actual transfer. [Emphasis supplied] 20. As per the averment of Shri R.S. Mehra referred to above, though there was an offer of Shri Mehra in 1981 for the transfer of the flat and though a commitment was given to the assessee for the transfer of the same by Shri Mehra, yet, the actual transfer was deferred by the Council. The reasons for deferring the actual transfer are neither indicated in the affidavit nor have these been indicated before any authority. Whatever may be the reason for the decision of the council not to transfer the property in the year 1981, one fact is established t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration of ₹ 2,31,000 was accepted by the assessee. In this connection, it is necessary to point out that a contract is not formed unless one party s offer has been fully accepted by the other party. Conditional acceptance of the offer amounts legally to the making of a counter offer that must in turn be accepted by the first offerer. Moreover the validity of a contract depends, apart from the agreement of the parties, on compliance with certain formal and intrinsic requirements. The validity of the contract also depends on compliance with any applicable, regulatory, directory or prohibitory views - (Encyclopaedia - N. Britania, page 989). 22. Applying these principles to the facts of the present case it is observed that there was an offer to the assessee in the year 1977 for the transfer of the flat by the council in consideration of ₹ 2,31,000. The offer for transfer was subject to the condition of payment of ₹ 2,31,000 as consideration. Assessee admittedly did not comply with the condition of payment of ₹ 2,31,000. It is stated that assessee had accepted the offer with the condition that the payment would be made on a future date. As has been pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee having influential capacity as an executive director of the Council. In this connection reference may be made to the order under section 144A dated 31-12-1991 in the case of the council where reference has been made to the published accounts of CTEPC para-5 in view of the valuable services rendered by Shri Ratnam over a period of 26 years the provision of residential accommodation is allocated. The Assessing Officer has further quoted from para-4 page 4 of the said order- The only argument advanced by the assessee (i.e., the employer) is that the flat has been given to Mr. Ratnam at cost in view of his long service of 26 years with the company. The Assessing Officer has further quoted from page-6 of the afore-mentioned order : It is recorded that there was no agreement of sale in respect of flat sold to Mr. Ratnam prior to 1988 when the flat was actually transferred. Considering the totality of the facts and circumstances of the case, I am inclined to agree with the conclusion of the ld. Accountant Member that the transaction between the council and the assessee of transfer of flat is not a commercial transaction but a transaction of conferring a be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in A F Harvey Ltd. s case [1977] 107 ITR 326, when it dealt with the ratio of the decision of Jamnadas case [1965] 56 ITR 648 (Bom.). At p. 339, the Division Bench observed as follows : We may also point out that there can be no analogy of the provisions of the Income-tax Act with reference to the assessment under the Act. At page-44, their Lordships have quoted from the decision of the Calcutta High Court in the case of Executors to the Estate of Sir E.C. Benthal (supra) as under : Though the language used in section 24B of the Income-tax Act, 1922, and section 19(2) of the Wealth-tax Act are similar, the subject- matter of the charge and the scheme of these two Acts being totally different, these two sections cannot, in our opinion, operate the same field. These two sections must be read and understood in their own context and must also be construed in the light of the respective schemes of the respective Acts including the respective charges under the respective Acts. These two Acts are not in pari materia as held by this Court in the case of CIT v. Balai Chandra Paul [1976] 105 ITR 666 (Cal.), and, accordingly, I am not inclined to be inspired by the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
