TMI Blog1984 (5) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... hich were annexed to the agreement to sell. The agreement provided that the sale deed could be got executed by Krishan Prasad either in his own name or in the name of his nominee or nominees. It was further provided that if the contractors failed to execute the sale deed, the purchaser would be entitled to get the sale deed executed by specific performance through a court of law at the risk and cost of the contractors, and, in that event, the contractors would also be liable to pay damages to the purchaser in accordance with the prevalent market price. By a letter dated December 26, 1966, Krishan Prasad informed the contractors that he had irrevocably nominated J. Dalmia (karta of the joint Hindu family) as his nominee to purchase the property in question. It was mentioned in this letter that after the nomination, Krishan Prasad would have no concern with the purchase of the property and that the contractors would deal directly with the nominee. The balance of the sale consideration, being Rs. 4,75,000, was to be paid by the nominee at the time of execution of the sale deed. A letter was also addressed on the same date by J. Dalmia to Krishan Prasad. It was mentioned in this letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contractors from their undertaking in the court not to sell the property. J. Dalmia retained his claim and rights for damages only in accordance with law against the contractors. The arbitrator gave his award on July 14, 1967. He awarded a sum of Rs. 1,02,500 "as damages or compensation for breach of the contract payable by the contractors to J. Dalmia, and the contractors were further held liable to refund Rs. 20,000 to Krishan Prasad, which amount had been received by the contractors from him. A sum of Rs. 1,000 was also awarded as costs to J. Dalmia, being the costs of legal proceedings which J. Dalmia had to take in the court against the contractors. Thus, a sum of Rs. 1,03,500 was awarded to J. Dalmia. When J. Dalmia (HUF), the assessee, filed the return of income for the assessment year 1968-69, it was claimed that the sum of Rs. 1,02,500 received from the contractors was in the nature of a windfall or a casual gain. It was claimed that the amount was not a capital gain as there was neither any capital asset nor the relinquishment thereof. The ITO rejected this contention and included this sum as "capital gains" other than long-term " Capital gains " in the taxable inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with law. For this no consideration passed from the contractors to J. Dalmia and Krishan Prasad. What was referred to the arbitrator was the question regarding the quantum of damages in respect of breach of the contract committed by the contractors. This right was in addition to, and not in lieu of, the right of specific performance as provided in the contract. We are, therefore, left with the question as to whether the right to claim damages in the instant case is a " property of any kind " and thus " capital asset " under s. 2(14) of the Act. The further question as to whether there was a transfer of such a " capital asset " would arise only if the right to claim damages is held to be a "capital asset ". But, again, it will have to be examined if such a right could be transferred. Relying on the decision of the Bombay High Court in CIT v. Tata Services Ltd. [1980] 122 ITR 594, it was contended by Shri Wadhera, learned counsel for the Revenue, that any right which can be called property will be included in the definition of " capital asset " and that a contract for the sale of land is capable of specific performance and is also assignable, and he referred to s. 15 of the Specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court in Swami Motors Transports (P.) Ltd. v. Sri Sankaraswamigal Mutt, AIR 1963 SC 864, he also submitted that the right of the assessee under the contract for sale of immovable property was not in the nature of property in that the assessee was having no interest or right of property. The Supreme Court was concerned with the question of right to purchase property by a tenant under the Madras City Tenants Protection Act with reference to article 19(1)(f) of the Constitution. Reliance was placed on the following passage of the judgment (p. 874) : " The law of India does not recognize equitable estates. No authority has been cited in support of the contention that a statutory right to purchase land is, or confers, an interest or a right in property. The fact that the right is created not by contract but by a statute cannot make a difference in the content or the incidents of the right: that depends upon the nature and the scope of the right conferred. The right conferred is right to purchase land. If such a right conferred under a contract is not a right of property, the fact that such a right stems from a statute cannot obviously expand its content or make it any the less a no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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