Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Girish Bansal, Gynendra Bansal Versus Union of India & Others

Amount received covered under Section 10(3) - whether receipts which are of a casual and non-recurring nature? - Held that:- The sum of ₹ 20 lakhs received by the Assessees was in the context of the cancellation of the sale certificate and the sale deed executed in their favour in relation to an immovable property and neither Assessee was dealing in immovable property as part of his business. While it could if at all be said to be in the nature of a capital receipt, what is relevant for th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

apital gain it was not open to the Revenue to seek to bring it to a tax under the revenue receipt. Following the decision in Cadell Weaving Mill (2001 (2) TMI 105 - BOMBAY High Court ), there can be no manner of doubt that what is in the nature of capital receipt, cannot be sought to be brought to tax by resorting to Section 10(3) read with Section 56 of the Act. - Decided against the Revenue - ITA 136/2004, ITA 138/2004 - Dated:- 28-4-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Assessment Years ( AYs ) 1993-94 and 1994-95 respectively. Background facts 2. The background facts are that the Punjab National Bank ( PNB ) filed a suit for recovery of the loan advanced to M/s The Table Ware Craft Cottage, Mr. R.K. Goel, Mr. Virender Kumar Goel and Mr. Jitender Kumar Goel against the security of a property situated at 7-A, Friends Colony, New Delhi, which was mortgaged to PNB. On 29th January 1981, the suit was decreed. 3. In the execution proceedings filed by PNB as Dec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uary 1989. 4. The Judgment Debtors ( JDs ), however, challenged the order of the Civil Court. The matter ultimately reached the Supreme Court by way of Civil Appeal No. 1003 of 1992. The terms of the compromise that was reached between the parties were recorded by the Supreme Court in its order dated 28th February 1992 as under: With the consent of all the learned counsel appearing for the respective parties, the following order is made: i) The auction sale of the plot in question is set aside u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

strar, Delhi on 6.2.1989. iii) Respondent nos. 2 and 5, namely, Girish Bansal and Gyanender Bansal undertakes to hand over the vacant possession of the plot to the appellants before they withdraw the money from the Court. iv) The first respondent, namely, Punjab National Bank undertakes to deposit the original lease deed of the plot before the Court in case the documents have not been deposited in the Court so far. v) If the original lease deed of the plot has already been deposited in Court the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ession of the plot to the appellants the respondent Nos. 2 and 5, namely, Girish Bansal & Gyanendra Bansal are permitted to withdraw the amount of ₹ 20 lakhs deposited in the Registry of this Court. There is no order as to costs. The appeal is disposed of accordingly. 5. Consequent upon the above settlement, each of the Appellants/Assessees received ₹ 10,00,000. The Assessment orders 6. Initially in the returns filed for AY 1996-97 each Assessee disclosed ₹ 10,00,000 as sal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g questions for consideration: (i) Whether the amount of ₹ 10,00,000/- revised by the assessee is a sale consideration and chargeable to tax under the head of capital gain or not? (ii) Whether the amount received is not a capital gain as claimed by the assessee in the revised return? (iii) Whether the assessee had claimed exemption of this amount and if so under what provision of Income-tax Act? (iv). Whether, the amount received is covered under Section 10(3) of the IT Act, 1961 deals wit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

paid was not covered under any exemption clause of the Act and further that the Assessees had failed to quote any provision of the Act under which they were claiming exemption. The AO concluded that the Assessees had failed to demonstrate that ₹ 10,00,000 was not chargeable to tax. On the fourth issue, the AO concluded that a sum of ₹ 10,00,000 in the hands of each of the Assessees was of a casual and non-recurring nature and was therefore chargeable to tax under Section 10(3) of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ecurring. In CIT v. Gulab Chand 192 ITR 495 (All), the Allahabad High Court held that even if the receipt did not fall within the ambit of any of the clauses under Section 2 (24) of the Act, it would still be 'income' within the natural meaning of that word. There could be capital receipts which at the same time were not taxable under Section 45 of the Act. Therefore, even if the receipt was capital in nature but not taxable under Section 45, they could still be brought to tax under Sect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

operty and if the answer to this question is in the affirmative, then what is the nature of that right which the Assessee had acquired?" The further issue was "if the answer to the question is in the negative, whether the amount received by the two Assessees was liable to be taxed and if so then under what head?" 11. In the impugned order dated 21st April 2003, the ITAT concluded as under: (i) The submission of the Revenue that the Assessees had acquired a right in the capital ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ny right in the property, and therefore, they could not have transferred any right therein as well. The ITAT agreed with the counsel for the Assessees that the Assessees had not acquired any capital asset and the receipt was not a capital receipt accessible to tax . Accordingly, the first question was answered in favour of the Assessees. (iii) The word any receipt is of wide aptitude. Again relying on the decision of the Allahabad High Court in Gulab Chand (supra) and the decision of the Bombay .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he amount received covered under Section 10(3) of the IT Act, 1961 deals with receipts which are of a casual and non-recurring nature, or not? 12.1 This court also framed a similar question in ITA 138 of 2003 by an order also dated 14th February 2005: Whether in the facts of the case the amount receive by the Assessee under a compromise recorded by the Supreme Court is a receipt of a casual and non-recurring nature within the meaning of Section 10(3) of the Income Tax Act, 1961? 13. At the outse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

This Court has heard the submissions of Mr. Sanjiv Sabharwal, learned Senior counsel appearing for the Appellant Assessees and Mr. Raghvendra Singh, learned Junior Standing counsel for the Revenue. Submissions of counsel 15. The submission of Mr.Sanjiv Sabharwal is that the sum of ₹ 20,00,000 that was deposited in the Supreme Court was directed to be paid to the Appellant Assessees in view of the order dated 28th February 1992, in lieu of the Assessees agreeing to the cancellation of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(3) of the Act. That provision was not a charging provision but an exemption provision. He submitted that this course was not available to the Revenue as was explained by the Supreme Court in CIT vs. D.P. Sandu Bros. 273 ITR 1 (SC), in which it upheld the decision of the Bombay High Court in V.D. Vakhaskar (supra). He also referred to the decision of the Karnataka High Court in C. Kamala v. CIT (supra) to point out that in similar circumstances, the receipt of money upon cancellation of the auct .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m of ₹ 20,00,000 received by the Assessees was a capital receipt or that it attracted capital gains that could be brought to tax as such. He submitted that at the time when the AO framed the assessments and the CIT (A) heard the appeals thereagainst, the decision of the Allahabad High Court in Gulab Chand (supra) was still good law and, therefore, they were justified in treating the receipt to be of casual and non-recurring nature exigible to tax under Section 10(3) of the Act. While he wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

argument that if the Court is not inclined to sustain the impugned order on the ground that the receipt in question could not be brought to tax under Section 10(3) of the Act, then the plea that it was in the nature of a revenue receipt should be considered. According to him the difference between the auction sale consideration of ₹ 10,05,000 paid by the Assessees and the sum of ₹ 20 lakhs received by them constituted the interest component which was envisaged even under Order 21 Rul .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uch a plea that the receipt is of revenue nature is being raised for the first time in the proceedings by the Revenue in this Court. As far as the assessment proceedings were concerned, the case of the Revenue was that the receipt was in fact of a casual and non-recurring nature and therefore exigible to tax under Section 10(3) of the Act. Before the ITAT, the submission of the Department Representative ( DR ) as recorded in para 11 of the impugned order was that the Assessees had acquired a val .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ave right . It was specifically recorded in para 11 of the impugned order by the ITAT that The Ld. DR submitted that the assessee in their wisdom agreed and consented to take the compensation for giving up of the right in the property and once having received the amount be it given in any name the said amount is to be brought to the tax and taxed not only under the proper hands but also in the proper heads . After having said so, learned DR submitted that the amount received is the capital recei .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

77; 20,00,000 was in the nature of revenue receipt in the hands of the Assessees. Realising this difficulty, it was urged by Mr. Singh, that the above stand was taken by the Revenue only in the light of the decision of the Allahabad High Court in Gulab Chand (supra) which at the relevant time was still good law. 21. Be that as it may, the Court finds that the Revenue cannot be permitted to shift its stand from one forum to another. The consistent case of the Revenue is to be tested at various le .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t of ₹ 20,00,000 by the Assessees was consequent upon the order recorded by the Supreme Court on 28th February 1992 in Civil Appeal No.1003 of 1992. There is no indication in the said order that the said amount constitutes the interest on the sum of ₹ 10,05,000 as is sought to be urged by Mr. Singh. On the other hand, in Clause (vi) of the compromise, extracted hereinbefore, there is a specific direction to the High Court to release the balance of ₹ 10,05,000 with the accrued i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tituted revenue receipt in the hands of the Assessees. Not a receipt taxable under Section 10 (3) 23.1 The settled legal position is that all receipts do not constitute income. For a receipt sought to be taxed as income, the burden lies upon the Revenue to prove that it is within the taxing provision. Among the earlier decisions of the Supreme Court is Parimisetti Seetharamamma v. CIT (1965) 57 ITR 532 (SC). There the Assessee explained that the jewellery and the money received by her were the g .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

empted from taxation. Her case was that the receipt does not fall within the taxing provisions at all. It was explained by the Supreme Court as under: In all cases in which a receipt is sought to be taxed as income, the burden lies upon the Department to prove that it is within the taxing, provision. Where however a receipt is of the nature of income, the burden of proving, that it is not taxable because it falls within in exemption provided by the Act lies upon the assessee. 23.3 It was further .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

concluded that what the Assessee had received was not accessible to tax. 24.1 In C. Kamala (supra), the facts were more or less similar to the facts on hand. The Assessee was declared purchaser of certain immovable property for ₹ 125 at a court auction held in 1962. The JDs then filed an application under Rule 90 Order 21 of CPC to get the sale set aside. After their application was dismissed by the executing court the JDs filed an appeal and during the pendency of the appeal, the dispute .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

able to be taxed as such under the Act. The case of the Assessee was that she had not acquired any title in the property in question and therefore the question of transferring any interest for a consideration of ₹ 20,000 did not arise. The case of the Revenue was that the receipt should be treated as consideration for relinquishment of her interest in a capital asset. 24.2 The Supreme Court C. Kamala (supra) negatived the plea of the Revenue holding that there cannot be any transfer of int .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ated as long term capital gains. 25.1 In Travancore Rubber (supra) the Assessee was the plantation company engaged in the business of growing rubber and tea. It entered into three agreements with the purchasers for sale of old rubber trees. The purchasers paid a certain amount by way of earnest money and another sum by way of advance under the three respective agreements. The total amount of earnest money received by the Assessee under the three agreements was ₹ 75,000 and the total amount .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee, the CIT (A) sought to revise the order of the AO by exercising revisional power under Section 263 of the Act and held that the amounts forfeited were revenue income. The Assessee succeeded in its appeal before the ITAT. However, the High Court remanded the matter to the ITAT. On remand, the ITAT came to the conclusion that the receipt was not accessible as revenue receipt but as income from other sources . Upon a reference, the High Court held that the amounts were income receipts in the con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Assessee and directly related to the sale of such capital. Accordingly, it was held that the forfeited amount ought to be treated as a capital receipt. 26.1 In Gulab Chand (supra) the Assessee was an individual carrying on the business of pawning and dealing in shares. During the relevant AY, he received a sum of ₹ 15,000 for surrendering the tenancy of the godown occupied by him as tenant. Initially, in the return filed the amount was disclosed as a capital gain. Later he contended bef .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

recurring nature which are exempted to the extent that they do not exceed to ₹ 5,000 to the aggregate, the High Court of Allahabad in Gulab Chand (supra) concluded that in the light of the decision in CIT v. B.C. Srinivasa Setty (1981) 128 ITR 294 (SC) even if a receipt is of capital nature it might not attract capital gains chargeable under Section 45 of the Act for the simple reason that there was no cost of acquisition for the tenancy right . Therefore it was held to be of a casual and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he decision of the Calcutta High Court in B.K. Roy (supra) and dissented from the decision in Gulab Chand (supra). The question before the Bombay High Court was whether the money received upon surrender of tenancy rights and whether such receipt could be construed to be a casual and non-recurring receipt within the meaning of Section 10(3) of the Act and as such is exigible to tax under Section 56 of the Act. 28.2 In Cadell Weaving Mill Co. Pvt. Ltd. (supra), the precise question addressed by th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by the assessee has accrued on transfer of the capital asset but it is not chargeable under section 45 for want of cost of acquisition. However, from that, one cannot bring such a receipt under Section 10(3) because section 10(3) refers to types of income which do not from part of total income. In other words, a receipt has to be income before it comes within the purview of Section 10(3). Section 10(3) does not apply to a capital receipt . 28.3 It was further observed as under: Department seek .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n 56. In the case of United Commercial Bank Ltd. v. CIT , it has been held that income which falls under one specific head could not be brought to tax under any other head. If for any reason, the computation machinery fails, it is not open to the Department to apply the residuary clause . 28.5 In Cadell Weaving Mill Co. Pvt. Ltd. (supra), the Bombay High Court summarized its findings as under: Whenever there is a receipt, one has to ascertain its source. If it is a business income or salary inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n 10(3), two conditions are required to be satisfied, viz., that the receipt should be casual and non-recurring and that it should not arise by way of business income, salary income or capital gains chargeable under Section 45. Therefore, the aforestated three types of incomes constitute exceptions to Section 10(3). That capital receipts do not fall under Section 10(3). 29.1 The decision of the Bombay High Court was carried in appeal by the Revenue and the said appeal was decided by the Supreme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sources falling under a specific head has to be computed for the purposes of taxation in the manner provided by the appropriate Section and no other . The amount received on surrender of the tenancy right would attract Section 45 and the amounts derived if at all would be taxable only under the head capital receipt and assessable if at all only under Item E of Section 14. That being so, it cannot be treated as a casual or non recurring receipt under Section 10(3) and be subjected to tax under Se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for supply of a cement plant with a condition that in the event of delay caused in delivery of the machinery, the Assessee would be compensated at 5% of the price of the respective portion of the machinery without proof of actual loss. With the supplier failing to supply the machinery within the stipulated time, the Assessee received ₹ 8,50,000 by way of liquidated damages, whereby the ITAT held this to be a capital receipt and the High Court answered in favour of the Assessee, the Revenu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

News: Notification Issued For GST Actionable Claim On Branded Food Products

News: GST Refund - Blockage of Working Capital of Exporters - earlier also there was a normal blockage of funds for a period of 5-6 months at least

News: Clarification about Transition Credit - ₹ 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on 30th June, 2017 - claim of credit of ₹ 65,000 crore is not unexpected

Article: 20 Things You must know about E Way Bills in GST Law

Article: MISTAKES IN DRAFTING

Forum: Duty Drawback- Urgent

Highlight: The Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes -reg. - Circular

Highlight: The definition of "subsidiary company" or "subsidiary" u/s 2(87) of the Companies Act, 2013 shall come into force w.e.f. 20-9-2017

Highlight: Central Government notified the All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017 - Notification

Notification: All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017

Circular: Investment by Foreign Portfolio Investors in Corporate Debt Securities Review

Notification: Exemptions on supply of services under UTGST Act

Notification: Rates for supply of services under UTGST Act

Notification: Exemptions on supply of services under IGST Act

Notification: Rates for supply of services under IGST Act

Notification: List of Exempted supply of services under the CGST Act

Notification: Rates for supply of services under CGST Act

Highlight: Acceptance of deposits by companies from its members - conditions relaxed in case of Specified IFSC Public company and a private company - Rule 3 amended

Notification: Rate of exchange of conversion of the foreign currency with effect from 8th September, 2017

News: Tax Payers Advised To Confirm Identities Of Income Tax Search Authorities

Notification: Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012

Forum: GST Invoice

Notification: The Customs and Central Excise Duties Drawback Rules, 2017

Circular: The Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes -reg.

News: GST implementation smoother than expected: Jaitley

Forum: GST - TRAN1 - filed - Data uploaded with Remarks Processed with Error - Not coming in Electronic credit ledger - need suggession guidance

Forum: 3B mistake

Forum: Input tax credit

Forum: Excise duty credit on finished stock at additional place of business.

Forum: Due date of Filing TRAN-1

Highlight: Diversion of income at source - Joint venture agreement - 97% of the receipt transfer to M/s TRG Industries (P) Ltd. - scope of the agreement - it is diversion by overriding title - not taxable in the hands of assessee - HC

Highlight: Expenditure on eligible projects or schemes u/s 35AC - After 01.04.2017 the legislature desired to withdraw such deduction. - The Union legislature was competent to introduce such amendment - HC

Highlight: Transfer of trading assets at cost price, the profit component also stood transferred to the outgoing Directors, which otherwise belonged to the Company - the fact that AO has made the addition in the hands of the Directors would not make any difference - additions confirmed - HC

Highlight: The interest u/s 234B of the Act cannot go beyond the stage of S.245D(I) before the Settlement Commission - HC

Highlight: Galvanized iron pipe is a different commercial commodity than a iron pipe, therefore the activity of galvanization in our considered opinion amounts to manufacture - Deduction u/s 80-IB allowed - HC

Highlight: Penalty u/s 271C - non deduction of TDS on interest paid to sister concerns in terms of Section 194A - Levy of penalty confirmed - HC

Highlight: Disallowance of interest - reference to section 179 - The legislature has also recognised, that the doctrine of lifting of veil in the matter of tax dues is to be applied to prevent fraud etc. and not where the company has suffered despite its normal bona fide function. - HC

News: RBI Reference Rate for US $

Notification: Amendment in Notification No. S.O. 3118(E), dated the 3rd October, 2016

Highlight: Discount on ESOP to be allowed as business expenditure u/s 37(1), during the years of vesting on the basis of percentage of vesting during such period, subject to upward or downward adjustment at the time of exercise of option.

Notification: Central Government appoints the 20th September, 2017 as the date on which proviso to clause (87) of section 2 of the Companies Act 2013, shall come into force

Notification: Companies (Restriction on number of layers) Rules, 2017

Highlight: Penalty u/s 271(1)(c) - additional income disclosure - surrender of income post survey u/s 133A - he disclosure made by the assessee is voluntary in nature, in the revised return - no penalty

Highlight: Reopening of assessment - notice u/s 148 issued on the directions of JCIT / CIT - a perusal of reasons for initiating reassessment proceedings clearly show that they are against the sprit of provisions u/s 147

Highlight: MAT - Adjustment to book profit - computation u/clause (f) of Explanation-1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A r.w.Rule 8D of I.T. Rules.

Highlight: Addition on account of alleged suppression of service value received - the addition made simply believing the Form 26AS will be an arbitrary exercise of power which cannot be sustained

Notification: Exempts intra state supply of heavy water and nuclear fuels from DAE to NPCIL

Notification: Seeks to amend notification No. 12/2017-UTT(R) to exempt right to admission to the events organised under FIFA U-17 World Cup 2017

Notification: Seeks to amend notification No. 11/2017- UTT(R) to reduce CGST rate on specified supplies of Works Contract Services

Highlight: Liability to pay duty on import of software - Though no authorization was given by the appellant to DHL, it is an undisputed position that the software has, in fact, been ordered by the appellant and have been delivered to them by DHL - the appellant is to be considered as the importer



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version