Income Tax Appellate Tribunal - Chandigarh
Income-Tax Officer vs Raja Shiv Dev Inder Singh on 30 June, 1986
Equivalent citations: [1986]19ITD213(CHD)
ORDER
F.C. Rustagi, Judicial Member
1. Since certain common grounds are raised in both these appeals preferred by the revenue, pertaining to the assessment years 1978-79 and 1979-80, both were heard together and are disposed of by this consolidated order for the sake of convenience.
2. Though the grounds raised are as many as nine but most of them are argumentative. The only two substantive grounds are whether the assessee was correctly allowed the status of HUF and whether the lands which were secured by the assessee through 'sanad' were acquired for something or nothing. First of all we take up the issue pertaining to the status of the assessee which, according to the assessee was HUF, though it was not accepted to be so by the ITO but came to be accepted as such by the AAC when the matter came before him. The facts in the background are very interesting. The assessee Raja Shiv Dev Inder Singh, who was connected with the erstwhile ruling family of Patiala, had filed his return in the status of individual but in the course of assessment proceedings had made submission to the ITO that his correct status was that of HUF. This gentleman had married a foreigner and what agitated the mind of the ITO was whether the said marriage was performed as per Hindu law. According to him, the assessee was to continue as individual, unless the marriage was proved to have been performed as per Hindu law. There is no dispute about the facts that portion of the property was received by the assessee on partial partition of the HUF. The assessee's father Raja Mahesh Inder Singh actually got some property from Patiala State. He formed his HUF with self, wife and his son Raja Shiv Dev Inder Singh, the assessee. Status of his father was accepted as that of HUF. There was partial partition to that effect and an order under Section 171 of the Income-tax Act, 1961 ('the Act') was passed. The ITO though accepted that the assessee got the property as a consequence of partial partition, observed that his marriage was not according to the Hindu customs or Sikh rites, as according to him, there was no proof to that effect. He also attempted to make a mountain of the mole because the assessee had originally filed his return in the status of individual and subsequently through a letter claimed the change in the status.
3. When the matter came before the AAC, number of photographs regarding the marriage were produced before him according to which it was held by him that the marriage was performed as per Sikh rites. There was also an affidavit which was placed before the AAC that the assessee was married to an American citizen whose name was Miss Gail Hare and was converted to Sikh religion before her marriage and was given the name of Jasminder Kaur. It was also asserted that she was blessed with three daughters who were named and brought up as Sikh girls. On this basis and for the reasons given by the AAC in para 4 of his order, he accepted the assessee's claim.
4. The learned senior departmental representative Mr. R.K. Bali on the first hearing on 12-6-1986 vehemently argued that there was no proof that the marriage was performed as per Sikh rites or Miss Gail Hare was converted as a Hindu. Regarding the photographs, he submitted that none was presented before the ITO and, according to him, none was on the file. After partly hearing the matter, the learned counsel for the assessee Mr. D.S. Gupta, who was present to support the order of the AAC, was asked to produce some photographs in support of his contention before the Tribunal as well, which were brought on the immediately next date, i.e., on 13-6-1986, in which at one stage before Sri Guru Granth Sahib the assessee with 'Sehra' on and Miss Gail Hare in a perfect veil as per Sikh rites are seen present. In the same photographs, late His Highness Yadvinder Singh is also seen standing behind. In another picture where some foreigners are also seen, the assessee is sitting with the bride who again is dressed as any Hindu bride belonging to respectable and royal family. By seeing the two photographs, the learned senior departmental representative went to the extent of saying that as to who this lady was in veil is not clear, therefore, these photographs are hardly of any worth to substantiate the assessee's contention. He submitted that why the affidavit of the bride was not placed on record. The learned counsel for the assessee, on the other hand, submitted that from the two photographs placed by him before us, it is more than clear that the marriage of Miss Gail Hare was performed with the assessee as per Sikh rites and, if this is there and she has been blessed with three daughters who have been named as Sikh girls and brought up as such and even bride's name had been changed to Jasminder Kaur, the learned senior departmental representative is just in realm of surmises when he challenges the truth.
5. After taking into consideration the rival submissions, looking to the facts on record, perusing the affidavits and photographs and reasoning given by the AAC in his order, we are unable to accept the finding of the ITO or any contention of the learned senior departmental representative. According to us, every word of the order of the AAC deserves to be confirmed on the basis of uncontroverted facts that the assessee with his mother and father constituted HIIF, it was as a consequence of partial partition of the said family that the assessee got the property in respect of which Section 171 order was also passed and then the assessee married though an American citizen as per Hindu customs but did not lose his nationality. She was given the name of Jasminder Kaur and, as apparent from the photographs, she was married before the most sacred religious book of Sikhs, i.e. Sri Guru Granth Sahibji. Even presence of late His Highness Yadvinder Singh who is seen in the photographs, bears testimony to the fact that the marriage was performed according to Sikh rites. We are unable to appreciate the wild imagination of the learned senior departmental representative that since the face of the bride is not seen, it could be anybody or photographs could be made without that particular event having taking place as, according to him, photography has progressed to a very great extent and day in and day out bogus photographs are heard being utilised for blackmailing, etc. It cannot be ignored that the assessee is connected with the blue blood of Patiala royal family. There is evidence of a witness regarding conduct of marriage. The girls who were born out of the said wedlock, have been brought up as Sikh girls. It was rightly observed by the learned AAC that the ratio of the decision of the Supreme Court in the case of CWT v. R. Sridharan [1976] 104 ITR 436 supports the contention of the assessee. His reliance is also rightly placed on the case of Mangat Ram Hazari Mal v. CIT [1968] 67 ITR 788 (Punj. & Har.). His observations are in conformity with the Court-made law that appellate authorities are empowered to alter the status of the assessee and determine the correct status and there is no need to annul the assessment. This is also trite law that the ITO and the AAC have coterminous powers. Once the evidence was placed before the AAC which was also put to the ITO which could not be controverted by him which was also placed before us which was impossible to be proved as bogus, merely looking to the wild surmises and imagination of the revenue that in photos it could be anyone else in the garb of bride than Miss Gail Hare, cannot find approval from any judicious mind. Case law cited by the AAC and Section 49 of the Act, on the one hand, and uncontroverted facts in the form of affidavit and photograph on the other hand, have compelled us to confirm the action of the AAC.
6. Coming to the second aspect of the matter that the asset which was the subject-matter of capital gains, was acquired by the assessee for nothing and, hence, it could not be subjected to capital gains, the main contention of the assessee has been that he acquired the said asset at nil cost. It has been held by the Supreme Court that where cost at which the asset is acquired cannot be visualised in the form of money, there cannot be any capital gains. The historical facts in the background of the issue are that a property was given in the form of 'sanad' issued by the Chief Secretary to the Government of Patiala and East Punjab States Union, on 22-3-1951. It was made as a grant to father of the assessee Raja Mahesh Inder Singh and his heirs for ever. It was as a consequence of the said 'sanad' which finds place in the AAC's order, that the assessee's father with his heirs became the owner of the said property. The contention of the assessee was that Raja Mahesh Inder Singh received it because of efforts of his forefathers. The ITO went on to say that nothing in this world could be for nothing as, according to him, maintenance of State and soldiers and property at least could have cost something. The learned senior departmental representative also submitted that the property must have cost something even if it was first given as 'sanad' to the assessee's father and subsequently it was maintained and that must have cost something to the assessee. The senior departmental representative though agreed with the proposition that no capital gain could be there in respect of property which was acquired for nothing, he did not agree that the property in question was acquired for nothing.
7. Once there is no controversy about the fact that property in question was given through a 'sanad' after merger of the Patiala State, it cannot be said that it was won in war for which soldiers or other paraphernalia were provided. It was purely a political decision and cost of acquisition in such a case is incapable of being ascertained. The Madhya Pradesh High Court decision in CIT v. H.H. Maharaja Sahib Shri Lokendrasinghji on identical facts is on all fours applicable in the instant case and goes in favour of the assessee. The facts of that case were that Ratlam State was received in gift by the forefathers of H.H. Maharaja Sahib Shri Lokendrasinghji. He had sold through registered sale deeds certain lands from the compound of the palace. In this case, it was at the stage of the Tribunal that an additional ground was taken by the assessee that it could not be subjected to capital gains. Their Lordships of the Madhya Pradesh High Court held :
(i) The liability for capital gains tax would arise in respect of only those capital assets in the acquisition of which element of cost is either actually present or is capable of being reckoned and not in respect of those assets in acquisition of which the element of the cost is altogether inconceivable, as in the present case. . . . (p. 147) It is trite law by now that capital gains could be subjected to tax only in respect of an asset cost of acquisition of which has been something in terms of money or is capable of being reckoned. In the instant case, the assessee's father got it not even for a song but absolutely for nothing. Therefore, there was no cost of acquisition. In the light of above discussion and for the reasons given by the AAC in his order, which we adopt, his action is hereby confirmed.
8. Before we part, we may mention that since the order of the AAC is more than detailed in respect of both the issues, we have intentionally avoided encumbering this order because that would have meant repetition and nothing else.
9. In the result, both the appeals are dismissed.