Commissioner of Income Tax vs D.L.F. United Ltd.

Arijit Pasayat, C.J.—At the instance of the Revenue, the following question has been referred u/s 256(1) of the Income Tax Act, 1961 (for short the "Act"), by the Income Tax Appellate Tribunal, Delhi Bench "B" (in short the "Tribunal"), for opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in its conclusion that Section 52(2) of the Income Tax Act, 1961, was not applicable to the asscssee''s case ?"

The assessment year involved is 1970-71. The Tribunal allowed the assessor�s appeal with the following observations :

"In the present case, there is no suggestion that the consideration for transfer as shown by the assessed was not the correct amount of consideration or that the assessed was in receipt of any additional amount not declared in its return of income. On the contrary, the genuineness and the accuracy of the amount of consideration received by the assessed was actually accepted by the Revenue when it assessed the capital gains of Rs. 52,500 offered by the assessed in its return in the original assessment made on October 28, 1972. We, Therefore, respectfully follow the above-mentioned decisions and hold that Section 52(2) of the Act is inapplicable to the facts of the present case and was wrongly invoked by the Income Tax Officer. This would mean that Section 45 without reference to section 52(2) will be applicable in the present case and the capital gains will be determined at Rs. 52,500 as originally determined in the original assessment. The Income Tax Officer is directed to follow these directions."

We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessed in spite of notice.

It is submitted by learned counsel for the Revenue that the view taken by the Tribunal is not on a proper reading of Section 52(2) of the Act. A question relating to the applicability of Section 52(2) was decided by the apex court in K.P. Varghese Vs. Income Tax Officer, Ernakulam and Another, . When the factual position of this case is considered in the background of such decision, the inevitable answer is in the affirmative, in favor of the assessed and against the Revenue.

The reference is, accordingly, disposed of.