Kerala High Court
Commissioner Of Income Tax vs Smt. Chandra Balakrishnan on 14 July, 2003
Equivalent citations: (2003)184CTR(KER)353
Bench: G. Sivarajan, Kurian Joseph
JUDGMENT
1. Both the appeal and the reference are at the instance of the Revenue in respect of two different assessees. The Tribunal in the order impugned in ITA No. 97 of 1999 has followed its earlier decision which is the subject-matter of IT Ref. No. 9/2001. In IT Ref. No. 9/2001, the Tribunal has referred the Mowing question of law under Section 256(1) of the IT Act, 1961 (for short the Act).
"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that it is true that the long-term capital gains arising on the sale of the property has to be taxed at the rate of 20 per cent as provided in Section 112(1)(a)(ii) of the IT Act and not at the rate of 60 per cent as provided in Section 113 of the IT Act ?"
In ITA No. 97 of 1999, notice was ordered on the following two questions of law :
"1. Whether, on the facts and in the circumstances of the case, and in the light of the finding that the capital gains arising on the sale of the property has been rightly included in the undisclosed income of the block period, the Tribunal is right in law in holding that the tax rate to be applied on the capital gains is at 20 per cent as provided in Section 112(1)(a)(ii) of the IT Act and not at the rate of 60 per cent as provided under Section 113 of the IT Act as assessed by the officer ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that if the income for any year was below the taxable limit the same should not have been included in the undisclosed income of the block period ?"
Virtually the question that arises for consideration in both these cases is the same as to what should be the rate of tax on the capital gains in a block assessment made under Section 158BC of the Act.
2. In this case the Tribunal had decided the appeal filed by the respondent-assessee in IT Ref. No. 9 of 2001 evidenced by Annexure B order. The Tribunal did not decide the rate of tax applicable to capital gains in the block assessment made under Section 158BC of the Act in the appellate order. The assessee, therefore, filed a miscellaneous petition M.P. No. 119/Coch/1997 in the appeal IT(S&S)A. No. 6/Coch/1996. The Tribunal, by its order dt. 8th Dec., 1997, allowed the miscellaneous petition and ordered that the correct rate of tax applicable to long-term capital gains is at the rate of 20 per cent only under Section 112(1)(a)(ii) of the Act and not at the rate of 60 per cent as provided under Section 113 of the Act. It would appear from para. 3 of the said order that the Departmental Representative agreed to the above view being taken.
3. As already noted the Tribunal in IT(S&S)A. No. 51/Coch/l997, which is the subject-matter of ITA No. 97 of 1999 has only followed its earlier decision in the miscellaneous petition mentioned above.
4. Sri. P.K.R. Menon, learned senior counsel (Government of India) Taxes appearing for the Revenue in both the cases submitted that the Tribunal did not consider the question regarding the rate of tax applicable on long-term capital gains in a block assessment under Section 158BC of the Act. Counsel also pointed out that the Tribunal had clearly stated that the Revenue had contended that the rate of tax on long-term capital gains in a block assessment under Section 158BC is 60 per cent under Section 113 of the Act. The senior counsel accordingly submitted that the Tribunal must be directed to consider the question afresh.
5. We have also heard Sri. P. Balachandran, learned counsel appearing for the respondent in both these cases. He submitted that the Tribunal did not pointedly consider this question only because of the admission made by the counsel for the Revenue before the Tribunal that the rate of tax applicable to long-term capital gains in a block assessment under Section 158BC is only at 20 per cent under Section 112(1)(a)(ii) of the Act. After considering the rival submissions we are of the view that the question regarding the rate of tax applicable to long-term capital gains in a block assessment under Section 158BG of the Act has to be considered by the Tribunal on merits. Since the Tribunal did not have occasion to consider the same while passing the order in the miscellaneous petition, which is the subject-matter of IT Ref. No. 9 of 2001, we set aside the orders of the Tribunal on this question in both these cases and direct the Tribunal to pass fresh orders on this question in accordance with law. In the circumstances we decline to answer the question of law referred to in IT Ref. No. 9 of 2001 as also the question of law on which notice is ordered in ITA No. 97 of 1999.
6. Question No. 2 in ITA No. 97 of 1999 relates to the assessability of income of an assessment year covered by a block period where the total income is below the taxable limit. We find that this question is covered by the judgment dt. 8th July, 2003 in IT Ref. No. 57 of 2000 where it was held that undisclosed income below the taxable limit for any assessment year covered by the block period is not liable to be included in the undisclosed income for the block period. In the light of the said decision we answer the second question in ITA No, 97 of 1999 in favour of the assessee and against the Revenue. We make it clear that the Tribunal has to decide only the question with regard to the rate of tax applicable to capital gains in the block assessment under Section 158BC of the Act.
A copy of this judgment under the sale of this Court with the signature of the Registrar shall be forwarded to the Tribunal, Cochin Bench, Ernakulam.