COMMISSIONER OF INCOME TAX V. CHOKHAWALA ENTERPRISES

ITR/14/1995

AI Insights

The case involves an Income Tax Reference by the Commissioner of Income Tax against Chokhawala Enterprises concerning the assessment years 1976-77 to 1979-80. The primary legal issues pertained to the correctness of assessments reopened under section 147(a) of the Income Tax Act and the taxation of notional property income under section 22. The Income Tax Appellate Tribunal (ITAT) had previously held the assessments as incorrect, which the revenue challenged. The High Court, referencing a similar case involving the same assessee for different assessment years, upheld the ITAT's decision based on the Supreme Court's ruling that the individuals in possession of the property, having paid full consideration, should be considered the owners for tax purposes.

• Counselvise Citation: [2002] 140 COUNSELVISE.COM (IT) 676042 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 26-07-2002
• Assessment Year: misc
• Other Referred Cases: CIT vs. Podar Cement Pvt. Ltd., 226 ITR 625
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NOTICE SERVED
• Assessee Lawyers: MANISH BHATT
• Keywords: Assessment; Income Tax; Legal owner; Property income; Notional Property Income
• Section: 22; 147(a)

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 14 of 1995 For Approval and Signature: Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE K.A.PUJ ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? @ COMMISSIONER OF INCOME TAX Versus CHOKHAWALA ENTERPRISES -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 14 of 1995 MR MANISH R BHATT for Petitioner No. 1 NOTICE SERVED for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE K.A.PUJ Date of decision: 26/07/2002 ORAL JUDGEMENT (Per : MR.JUSTICE M.S.SHAH) In this reference at the instance of the revenue, the following questions have been referred for our opinion in respect of assessment years 1976-77 to 1979-80:- (i) Whether, on the facts and in the circumstances of the case and in law, the ITAT was justified in holding that the Assessments reopened u/s.147(a) are not correct when it is a fact that the assessee had not declared its correct income by not declaring property income in the returns of income filed, though in absence of registered sale deeds executed in favour of prospective buyers, he was the legal owner of the property? (ii) Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in holding that the notional property income taxed u/s.22 of the Act treating the assessee as legal owner by the ITO is not correct when it is a fact that the assessee had not executed any registered sale deeds in favour of prospective buyers of flats/shops etc.? 2. We have heard Mr MR Bhatt, learned Senior Standing Counsel for the revenue. Though served, none appears for the respondent - assessee. 3. For the sake of convenience, we will first take up question No.2 as identical question was referred for our opinion in the case of this very assessee in respect of assessment years 1980-81 to 1983-84. In view of the decision of the Hon'ble Supreme court in CIT vs. Podar Cement Pvt. Ltd., 226 ITR 625, we have answered the similar question in the said reference in the affirmative i.e. in favour of the assessee and against the revenue by holding that the persons who were put in possession of the flats/shops on the assessee receiving full consideration were required to be treated as owners of the flats/shops and, therefore, the order of the Assessing Officer by taking notional property income in the hands of the assessee under Section 22 of the Act by treating the assessee as a legal owner was not correct. Following the aforesaid decision of the Hon'ble Supreme Court and our decision in the case of this very assessee in ITR No.23 of 1994 decided today, we answer question No.2 in the affirmative i.e. in favour of the assessee and against the revenue. 4. Coming to question No.1., in view of our answer to question No.2 as aforesaid, question No.1 is academic and, therefore, it is not necessary to answer the same. We accordingly decline to answer question No.1. 5. The Reference accordingly stands disposed of with no order as to costs. (M.S. Shah,J) (K.A. Puj,J) zgs/- "