COMMISSIONER OF INCOME TAX Vs. VINOD KUMAR GUPTA

JUDGEMENT

(1.) THE Revenue has approached this Court by filing the present petition under s. 256(2) of the IT Act, 1961 (for short, 'the Act') seeking direction to the Income -tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, 'the Tribunal') to respect of asst. yr. 1982 -83 to this Court for opinion : "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding the insurance compensation as capital receipt and holding the action of the CIT to invoke the provisions of s. 263 as unlawful -

(2.) BRIEFLY , the facts are that the assessee received certain sum of Rs. 34,143 as compensation from the insurance company which was claimed to be not taxable in the return filed treating the same as capital receipt. In the assessment framed under s. 143(3) of the Act, the AO did not include the amount in the taxable income. Treating the order passed by the AO to be erroneous and prejudicial to the interest of Revenue, the CIT, exercising powers under s. 263 of the Act, revised the order and directed the AO to include the sum in the revenue receipt and charge tax accordingly. In appeal by the assessee before the Tribunal, the assessee succeeded and the order passed by the CIT under s. 263 of the Act was set aside. It was further noticed by the Tribunal in its order that before issuance of notice under s. 263 of the Act, even the proceedings under s. 154 of the Act were also initiated but were dropped. It was found by the Tribunal that the ingredients required for exercise of power under s. 263 of the Act were not available in the facts and circumstances of the case.

(3.) AFTER hearing learned counsel for the Revenue, we find no substance in the present petition. The AO at the relevant time, while framing assessment under s. 143(3) of the Act had treated the receipt to be capital receipt. Merely because there was a second opinion possible on the same facts, in those circumstances, the powers under s. 263 could (sic -not) be exercised. Accordingly, we dismiss the petition.