KRISHNA DEVI DALMIA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE are four appeals from the order of a learned single Judge dt. 31st Oct., 1973. At the conclusion of the hearing we announced our decision. We dismissed those appeals. Now we give our reasons.

(2.) THE appellant, Shrimati Krishna Devi Dalmia, is the assessee. She filed IT returns for the asst. yrs. 1957 -58 to 1961 -62. She had acquired a large number of shares in certain companies. She sold these shares and realised amounts far in excess of what she had paid for them. To begin with, she took the stand that the excess amount was not liable to tax. But this contention was soon given up. Then she took the position, and this was her case throughout, that this amount would be liable to tax as capital gains as capital gains tax levy had been introduced from 1st April, 1956, in the income -tax law. A provisional assessment under S. 23B of the Indian IT Act, 1922, was made and she paid the amount of capital gains tax. In due course the ITO made the regular assessment and taxed this amount as business profits. From this order, she appealed to the AAC. Her appeal was dismissed. Then she took the matter in appeal to the Tribunal. There, as before, her contention was that this amount was merely a capital gain and that the ITO and the AAC were wrong in taxing this amount as a business profit as if she were a dealer in shares. The Tribunal, by order dt. 14th March, 1963, accepted the appeal and held that the amounts in question were "merely capital accretions" and were not liable to be taxed as business profits. The Tribunal said thus:

(3.) IN our opinion, there is no merit in these appeals. Clearly, the Tribunal has held that the surplus amounts accruing to the appellant from the sale of shares were "capital accretions". If this is so, there can be no manner of doubt that in terms of this finding her assessment had to be revised by the ITO. The only course was to tax the capital accretions as capital gains. The law regarding capital gains tax levy had come into force on 1st April, 1956, and under this law if there was a capital accretion it had to be taxed as capital gains. This position the appellant herself accepted throughout the proceedings and never for a moment did she dispute it. She, in fact, paid capital gains tax on the provisional assessment under S. 23B of the Act. In her letters and representations to the Department she said that she understood that the amount in question was subject to capital gains and that this amount she was prepared to pay and that she was not liable to be penalised for any default. She had herself described the surplus as capital receipts. When the ITO made the application on 9th May, 1963, she seems to have been advised that she could ask for refund because there was no direction by the Tribunal in its order to tax the amount as capital gains.