COMMISSIONER OF INCOME TAX Vs. LAXMIDEVI RATANI

JUDGEMENT

(1.) THIS is an income-tax reference made under Section 256 (1) of the IT Act at the instance of CIT (Revenue) by the Tribunal in RA Nos. 248, 249 and 250/ind/1992, dt. 13th Sept. , 1996, which arises out of ITA Nos. 1100, 1040 and 1041/ind/1991, decided on 27th July, 1998, to answer following question of law : "whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding the amount of Rs. 7,34,000 as capital receipt not exigible to capital gains tax as no transfer of any property was involved within the meaning of Section 2 (47) of the IT Act, 1961 ?"

(2.) FACTS stated in the statement of case drawn by the Tribunal need to be taken note of to answer the question referred.

(3.) THE assessee, Smt. Laxmi Devi Ratani and one Shri Murlidhar Totla were the partners of one firm--M/s Indian Pharmaceuticals. The firm had entered into a contract to purchase certain immovable property from Smt. Ratan Bai Tongia for Rs. 1,05,000. An agreement to that effect was entered into between the parties on 25th Sept. , 1970. The agreement was not carried out by the seller and hence, assessee-firm was compelled to file a suit for specific performance of contract against the owner of the property in civil Court. This civil suit was dismissed by the civil Court (7th ADJ, Indore) on 27th Nov. , 1976. An appeal was filed in High Court. It is in this appeal, parties to the appeal, i. e. , parties to the agreement entered into a compromise on 12th May, 1986. In terms of compromise, the owner/vendor agreed to pay to assessee (purchaser) a sum of Rs. 14,85,001 as what is called consideration or damages. Accordingly, the appeal was disposed of in terms of compromise.