Karnataka High Court
The Commissioner Of Income Tax vs Sri H Anil Kumar on 4 January, 2011
Bench: N.Kumar, Ravi Malimath
11% THE HIGH COIERT OF K.ARN'ATAKA AT _
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.19» :LL.1'<axge'\\,;;:y;:'. mj :1*§e%'_;;_:fV 'C;3MM1ss1oNER OF INCOME; A' }}a.3r2g:;s;:3Ho:' A. BEHGAMWALLA AND ORTHERSA ;je§3c):*i;téc1_ 95 ITR 28 (BOM) {.116 Bombay I*~E1'g1'1 C_3a',»*-.v,1.3.ji. dr:?;L1§§.i1f-__f":?§:§i'.1'1 '?.'I"1fiT <_r22_.'5«_-? of :1: :'ig_§}'1i. to Féilif for dz11'n;1§;<:::~3 'f(;1iE3}'s;'21(:§'§'c>i°é=a;.'{%<>:2't.1"a(:i. of 1.02-136?, held E.II'iC1C1'2 "f§*?;'e2f(f?:~ is no (1§[f2'(:z.:{I._;,: in h0l.dfng {hat {he 'A V :*z'g}1.r' "I'j¢§f__I<§a:;c* Cc)2'1st.iI'I:E'c:(£ 'c:*apz'{:a.i 61.55311 $l.£.{.Ti"1 <51 'r1'gi'1{.' gjcii e,\:f"rT:1g;1.Lis?1ed ai Eeaas! on 2691" S<3}r3£.§ £9651, ' . u:f1"c?I5'z i.f'1.is Court' ref_f1.eseci. in grant s:p€?»::g'.1'"ic:
jgeffk>r'n"zam.7e;? Qf zfig? e:z§;rc*cr'?'2<3n (1., if no!" eaar*I£e>I' am ?'-T'? Jan" $335553, Eda->k9a I326 dczie Qf §3z'c.>{2:?I2 6})" :'%<>n2"r(1::?z' \ 5$S'§?e3?9}2§?33§}EZ'>& 25 to the assigrmr in l.?{(?l1.F of {"116 assI'gJ'tc%e's !'1(:u.:ir'.1{j;f,"V._ mlder f'(1}<:c>.1'z the? lfaizvflii 3,1 to pay Ihe? cniirzs (;I3'1o1L:«:~f'.(gf7. L' Consideraiiorl r..z.ndc>r :i'1.e cicfed qf c1ssi_qr'f.r_ri1£3:':.I;._ '1"I'1ercjbr'e, it. crc1.r'm.or' be sczid 1.!-tap 1'1'.:z»;>__ (L9s5;%é§$§é2?c+.: acquir"£;>,cI rights rmder Kite dgre.¢>.171A¢t'1.I"'~TT wz'rhoz.1I' having had to :fn.(7r.1r v4t:;'z'i3'_Vfl cost' !:r'sf:fn'f.1_[)l.y V be3crausc>. the cfusquefor I{'.<§.5V__aIc3:iV§i1s I..L:'€7§_'3 iegrir-f{':é5dVIigrh if 1.1.rzencc1si1eci by ('M19 l..!c';'.'J'ld()'Jfl2"?j}t;'~,QI"{':()i£'l}.{. Iaklu; fr; rccer'ue.>d Ie>.?§:fi$'V~;_I'ro;_'i:1h })e§*cii1se instead Qf being paid h~:'.z'.:"1.i'5cI_*_i':f1.iif1;'§'i"Ig%g paid to the venclor by--!_I_'z.e'> vI.?'"l,A.1E"f€?ELP assignor having beat-§r1«{:%;>»ii::r\:1Vé'(1 iifléh e@{rt»'.!_Vci§2"'tzrflozmt by {he uendorfi. ;I'h;-£5? ,'I'f'£}fgj;,:_}'iaf 'right in holding f.hC._;t' I.7I:6"£TA1(ii§.¥'?1HQE7f.7'l£*.V%i.'33££:iS{3£3 that 1'1. did not iI1(.'f.U' <:z,r1yz'--«:é(}.~;.{" Vin rights 1.r.nd,<:r the said agree:7i::I.'_Ii z.vas._r1c'2'f'_ &1cg:£i:_ptable. It is a. sealed iegal p{o:§r{::f;);'1 I.ha1_ " V1..h.c> I Cour! can give relzieg/' on I;'1'1.e "'gf()r5:jr2rl "(.3)" Sl.lbSv¢;'Cj'IH1't:?J'iZ" fn't_p()ssr'b1'I1't'y wflen rr. fz'na's I:I:1(LE._(:I1e'_'wiwle purpose or the basis Qf the conZ,racI' '' -IICZSVj}'i'_i'§5{I'{fiIéi'1 1);'; fits? fn<:'lu5~:f0rz or (}CCTl..£I'I'r:'I'te:.'{:' Qf an. '~-:_1:2e,jq9'ec§{.}£+d z:>ven1_' or mange Qf cr'rcum:sfan.<;>c*s r.L.2I"n'.ch;. u:c'I'€. not c()r'r.Le;>nwplczierl by {.718 parties on {he ' "duate Qf" £:h_s.a (><m.trc1cL In the instant crczse. if fs V'"e72'::icier'1.I' tzhai: ('.119 assesgsee rm! c)rrly did no{ re-3._<;cr'r'1d the <::(:mi,ra<.:I 332,13" p:"cJefec-.'(1c*(,i {<52 (lssigrl its be1?r1.e;f"i!"s ii:
28 Qj' me» c,'c):'2tTra{?I". Ii. is {I seI:{Ze?§2' Z..<2g{z.l ;;2(3sit.1'on fflaz' T z'.h.e Case Qf sale 53]" ir"rm1o1,.=abie pm_periy. :'i1e2re;"i5«. presa.11'7'2pi.1'on againsi §1'.rne being Qf the Qf. ' {he con.I.rac{. arld merefixai.'i.or'1. (2f~£.f'zr!3' which file C()I'Li.T(2(fE flag {:0 be p'€§ffE}f'f2'Z¢?:f1.'RCi%}é?$ 'f1f3§T :">., make me time the essence Eff The (?{)§3.i?.+E(i(?;.
Ti1.er(,j "c3r'e_. if. cannot 1:36 ..: haIl "r.§«1_.(-,fI'e3 ass1'.gI'1n'7en.I" made by the "1'{_z'§ hvgglcl that [here is I1c)\f'}'11s-tfcf;--iior:--'_V ..(_,":';'1:"1.iI:'".(J.C?F4 and thar. there was cost. Qf ac?qu.i'sii'i'('2:'2; Qf the Confracf. lféIb.£é '_jE)r tax on Capital 'ga§':iI1s rv3.§'3;>ec1.;!(3f"_Sz;:fi" ;;¢t?'éfL>ed. by it in com; idér_a11'-fi3fi..v(g]' {hr-: Qéxéigrjimcr1t §gf'fhe coniiracri. "
21. ;r:4'IVn§..1'"L;-1'6 Bench of ixhe lvladhya P1'£1df3Sh "E-Iiglz Coxzrii 1:11 a };~«,-aQQCOMMISSIONER or INCOME TAX _ _ Vs. RATAN1 & oas, 1'<?p<)r1.€c1 in. (2008) 296 ITR«363_V(MTP}'d'@;1Eing with a c:as_;e of giving up a right, to ciaim sf)fi<i'1fj<;*« jjeF§7£3r1'1'1jc1'1'1(:<3 of 2.1 {'.()}'}f.II'E}(?E in lieu of (T()I]SiC1€l"21EliOI] _ 1't;=.(1c:;*.i\}i:'(1 in 1:'c:"i'1'1s of {.1362 <jrcm1pr01'1.:ise E3e1,\-xzemz '{'1"if3 pa1'IIieS, hfffid ° ifis nt,I;'.11_ Clerf "
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22. T116 .De%hi Higil C,m,.1_;i1...___i1'1 _- t h{~.* (1-f_ COMMISSIONER OF INCOME TAX Vs, J,;miL5zz_AA.;fé;>:.5':9é§e.«:1 "m (1984) 149 Im 21 5 (DEL), degxiiz-lg_w;:,1~;' 'e:.hE ::;1st;~. §§..;angnlinee of the giviiyg' up 2:1 right E:'i':._s;.>.<;7<:i.I'ic '1.:-c:r';{bz'm:%ar1ce but 1*eE.21in'iI1g his 1"igj_§h1 'E0 $1211.11:---.{:Ié;~1112'1gesi--1'1eE'd_'a_s'uM1j.dez':
" The rzélevaru.A"q'¢ae$'{i<3r:._E5; n€J_!. «V1:i.v'}Fie2Iher U16.' CL'55€'S3€¢' €5C'<'J'«'-«'«;1j'+'v7~''''-''d 551%} 1 ii'i£:'z3:'é5,l in " {--..h,r3 imrnovable ;)r()per'I;y--. cj';'-'. [hc:> fid'ri{'?*;1£:?1.'jbr sale. Uncier Q17.IhsfV?"rw;£n§fb;f"(gffiIi'r:<)})érl.;; Act. a (:o1'1z:raci'jbr sale ('z'}':_ir§:r1'1oi>(Jt_I'&)'l¢§ gfdoes not by 1' (:39;/'crecztc any iz'1(<}i':T2.<;t.V'i::z_(;r c?h_drg'c> on such properiy. It is to (vié'ierI11iI'zVe'dV .1,zg_I_1_cgIf.I2er d.cm1ages receiveci by the V' Awvere in respcczi Qf trczmjfer Qf a 'capital was a breach Qf conz'rac?I, and the rrfc?ez'1,=cc1 dcnn.ages in s(u'1'5jft1c:ti()r1. i:f1e:'reQf'. fie»: fziid. 'a' Vrnez'e 1'z'gi't{ to suefor ci.a1'nage5;. Assz.um'.ng _1 he. *.s;E:_me to be 'pr'(3perI.'y° {his could 11.01:' be , _ ii"r3(A;%r'1:;Kf};='r7'e%(1I ur'1dcr s.E3{er} Q!' Ihe '.i'r(1.n:~'g fer Qf"Proper'I.y Aétz w;"2z'<.*I'2 r(?a(i UICZE 'cz I'I'I.{'.'I"(;.' rigi'tz: to sgue? <:t(1nr1.c)I 53::
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34 €1€3ciL1(%f;:i():.'1 'the é,?11'11()L1}'1El a1';'ivec:.i 2'1'; wm11c:¥ 'De. ttxigilsle 1'i<:r {f2i'1"3jt7211 gain fax.
25, "I'§2ere§'()re. the T}'1'*¥)L1I}E11 . w;.1sA' zT101'.- __}«.,1.€stéfi<;€-_(L"1'..Aim. i11te'rf€1'i11g wiih the orders pass<:*<§_ "T:5gg £116 '::e;seSs£11er*1'1;'(;»*§i'iv::€:;: 2153* well the ap}_)e11.a*L.e 21uthQrii.y. AV1'r=1<:»_\}ae,_\:*'c'%2:, bot4§7i't1*1(:. ;1;{11.hori"i.ies have not given C1(?dL'1(?l.i()I:ISiiI1'Li1_$f3¥ Sc:{:1it(';..r3 48 to which t.h.e azsscssee is 1egit.i:11_é-ii'.:\__1y esn{i{I'e:d t<)f ~.fi77.3T_1(3I'€'if(1IfV'4E§»;" the ctenlpuiaiion of capital gaigzes 'ls rim _'si,.r'iQi1_y;' $31 e1t:(,:%f)1ide1:1(5i3. with law. it has {.0 be F€~\&'()ViT}{.§3vC1E'}fi§3 _1ig__§h'i. €)'f "fl__1__<;3 0,bse1'vat.1'0ns made above, kecping ;i_n 1:;11.t;1d S%;%'(?1;,iOi1_ {he ./~\nc:t. To thztt. e:<:1.<3m,, the said erders aisd reqL;ii'w3s'°silo. be 'ini.erf'er<-:d with and cannoi, be _' , Ai::'e_Q1'di11giy. the s;L1bs;i"ar1t.iz;11 quest,i0ns of law 1*'a:_isfs"é,(_iA.i.:;;" Ehis e§1:"=.'éé, 21:1: z1t1s'wer(*(£ in favour of the 1"eve1'1ur: and 21ga.ii'?s1'. i,-11.6 H'<3:1c:e, we pass ihe i"01Eowi.ng (>'rde1': ~ 2') ii} iii} A c1~;._;,!-
35 Appeczis are-'> (1l.l()ii.¥{?d .
'Ff'1c z'.mpu_c;r'1ed (xciers ciaieci 251 'c2{.I'¥Vi3V S?}«I--2005 passed. 53;; the In.cc)me 3f'1tz_,_{* 'V 'I'rz'bzmal. .£3angc1Zo1'e_. in rrgf" £103.31.ifiepzsse-5§s€S3 are Imrebg set aside.
The erztire marrer is :'c3Vi'3?L2i;'Vi'e:r,:i. baék~.fi.(§"'fh€-3 a$;sess1I1er'1t Qfficer to c*onipc:;e i._~'ie> c}a--p;ii.riI'-gai:1s z'r é Ci,ccord.ance with law and in 7I:i'1{3 light' Q?3._tVf':.;ijQbserualfons made czbope '.i'c._r,>é;)ir1_gé_ in.§n1i~f1d*Sécr'2f.ia11 Qj' the Act.