COMMISSIONER OF INCOME TAX Vs. VITHALBHAI P PATEL

JUDGEMENT

(1.) THE Tribunal, Ahmedabad, has referred the following question for the opinion of this Court under s. 256(1) of the IT Act, 1961.

(2.) THE relevant assessment year is 1974 -75. The return of income was filed by the assessee on 31st Oct., 1974 and a revised return on 28th Jan., 1977 in respect of the relevant previous year. The assessee claimed that he owned 29 guntas of land of Survey No. 23, which were partitioned on 5th Jan., 1972. He, therefore, filed a return in respect of the capital gain on sale of land coming to his share. The ITO found that during the year under consideration, the assessee had sold 105 plots out of Survey No. 23 and working out the long -term capital gain at Rs. 32,533 added the same in the total income of the assessee. The AAC held that as per the order dt. 27th March, 1975 of the Collector of Surat, the said sale was null and void, in view of the provisions of S. 4 of The Gujarat Vacant Lands in Urban Areas (Prohibition of Alienation) Act, 1972, which prohibited alienation of land in any 'vacant area' after the commencement of the Act, by way of sale, gift, exchange etc. It was held that when the sale was void, there was no transfer and hence, no capital gains arising out of any transfer. The Tribunal taking note of the fact that the sale of land in question was null and void, which fact was not disputed, held that since there was no sale of land in question in the eye of law, there could be no capital gain arising out of a transfer. The order of the AAC deleting the addition was therefore, upheld.

(3.) ADMITTEDLY , the purported sale was null and void under the provisions of S. 4 of the Gujarat Vacant Lands in Urban Areas (Prohibition of Alienation) Act, 1972. Under S. 4 of that Act, it was provided that no person who owned any vacant land, shall on or after the appointed day, alienate such land by way of sale, gift, exchange, mortgage other than simple mortgage, lease or otherwise or effect a partition or create a trust of such land and any alienation made or partition effected or trust created in contravention of the said provision, be null and void. Therefore, the transaction in question was void ab initio and it was so declared by an order of the Collector made on 29th March, 1975. Admittedly, the order of the Collector declaring that the sale transaction was null and void, was not challenged. Thus, since in the facts of this case, there was no sale transaction in the eye of law, there could be no capital gain arising out of a null and void transfer of such land. In this view of the matter, the Tribunal was right in coming to the conclusion that no capital gain had accrued to the assessee. The question is accordingly answered in the affirmative against the Revenue. The reference stands disposed of with no order as to costs.