COMMISSIONER OF INCOME-TAX Vs. MARRY JOSEPH

JUDGEMENT

(1.) THE assessment year is 1983 -84. The question referred at the instance of the Revenue is, 'Whether, on the facts and in the circumstances on the case, the Appellate Tribunal is right in law in holding that the capital gains arising on the sale of the Quilon property is not assessable in the hands of the assessee but only in the hands of her four daughters ?' The Quilon property is the one referred to in the will of the deceased father of the assessee, the late S. A. Pereira, who, in his will dated September 11, 1979, dealt with that property thus : 'Regarding my house property at Quilon in survey No. 11005 in Uliyakoil Village, Quilon Taluk, Quilon District, Kerala State, I bequeath the same to my daughter. The income or sale proceeds of the said property have to be utilised for the education and marriage of my grand children. The balance, if any, can be taken by my daughter.'

(2.) THE testator was also the owner of two businesses, both styled as Colombo Saree Works, one located in Coimbatore, and the other in Kerala State. He bequeathed the business in Kerala to his wife, and the business in Coimbatore was bequeathed to his daughter -assessee.

(3.) THE Assessing Officer, however, held that she had, in fact, derived capital gains from the sale, and that such capital gain was taxable in her hands. He did so after rejecting the assessee's claim that the property did not belong to her, but belonged to her four daughters and that any assessment of the capital gain will have to be in their hands. The capital gain was determined by the Assessing Officer at Rs. 1,88,466 after deducting from the purchase price, the cost of acquisition of Rs. 18,000 and the deductions allowed under Section 80T which was then on the statute book.