(1.) This appeal is preferred against the judgment of the Andhra Pradesh High Court answering the question referred to it in the negative, i. e., against the Revenue and in favour of the asseseee. The question referred is "whether on the facts and in the circumstances of the case, the capital gain of Rs. 58,000 was assessable in the hands of the assessee in terms of Section 64(1) (iv) of the Income Tax Act, 1961." The assessment year concerned herein is 1966-67. Section 64(1)(iv), as it stood at the relevant time, read thus:
(2.) The respondent-assessee is an individual. She was carrying on the business of mica mining and was also having income from property and money lending. During the financial year 1956-57, the respondent made a cash gift of Rupees ninety thousand to her minor son, Suryanarayana Reddy. This amount was immediately utilised for purchasing a house property at Gudur. The said house property was being utilised for the purpose of the assessee's business. Eight years after the purchase of the house, i. e., on July 5, 1967, the said house property was sold to Tirupati Devasthanam for a consideration of Rs. 1,48,000/-. On the date of this sale also. Suryanarayana Reddy was a minor. The Income Tax Officer included the capital gain of Rs. 58,000/-. in the assessee's income in terms of Section 64 (1), which was objected to by the assessee. Her appeal to the Appellate Assistant Commissioner was dismissed. Her second appeal was, however, allowed by the Tribunal relying mainly upon the decision of this Court in Comm. of Income Tax, West Bengal- III v. Prem Bhai Parekh (1970) 77 ITE 27 : (AIR 1970 SC 1518). Thereupon, the said question was referred for the opinion of the High Court at the instance of the Revenue. The High Court too held in favour of the assessee, again relying mainly upon the decision in Prem Bhai Parekh.
(3.) Sri J. Ramamurthy, learned counsel for the Revenue, submits that the High Court has misunder-stood the ratio of Prem Bahi Parekh. He submits that the ratio of the said decision has no application herein. On the contrary, the learned counsel submits, the facts of Sevantilal Maneklal Sheath v. Comm. of Income Tax (Central). Bombay, (1968) 68 ITR 503 : (AIR 1968 SC 697) are quite similar to the facts of this case and that the ratio of the said decision squarely governs it and concludes the issue in favour of the Revenue. Learned counsel also pointed out that the decision in Prem Bhai Parekh (AIR 1970 SC 1518) was explained and distinguished by this Court in Smt. Mohini Thapar v. Comm. of Income Tax (Central), Calcutta (1972) 83 ITE 208 : (1972) Tax LR 444). Counsel submits that though both these decisions were brought to the notice of the High Court, it has erred in distinguishing these two decisions and in following Prem Bhai Parekh. (AIR 1970 SC 1518). We are inclined to agree with Sri Ramamurthy.