COMMISSIONER OF INCOME TAX Vs. MAHENDRA R. DIVECHA

JUDGEMENT

(1.) THE following questions has been referred by the Tribunal, Ahmedabad Bench "A", under s. 256(2) of the IT Act, 1961 (the Act), at the instance of the CIT : "Whether, the Tribunal is right in law and on facts in holding that the provisions of s. 10(3) have been wrongly invoked by the ITO in bringing to tax the consideration received by the assessee in lieu of surrender of tenancy rights - was a statutory tenant. On surrender of his tenancy rights, he got residential premises in another housing society at a cost of Rs. 60,000, and such cost was paid by the purchaser of the tenancy rights, on behalf of the assessee. The AO adopted the market value of property at a sum of Rs. 80,000 and after allowing statutory deduction of Rs. 1,000, taxed the assessee on an income of Rs. 79,000 under s. 10(3) of the Act.

(2.) ON appeal, the Dy. CIT(A) held that provisions of s. 10(3) of the Act could not be invoked since the present transaction had resulted in capital receipt which could be brought to tax only under s. 45 of the Act.

(3.) THE Revenue carried the matter in appeal before the Tribunal and placed reliance on decision of the Allahabad High Court in case of CIT vs. Gulabchand (1992) 101 CTR (All) 226 : (1991) 192 ITR 495 (All). The Tribunal, however, did not accept the contention raised on behalf of Revenue, and following the apex Court decision in case of A. Gasper vs. CIT (1992) 102 CTR (SC) 161 : (1991) 192 ITR 382 (SC), confirmed the order of Dy. CIT(A).