RAJMAL CHORDIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question of law, arising out of the order of the Income-tax Appellate Tribunal for the assessment year 1978-79, has been referred to this court :

(2.) THE relevant facts in brief are that the assessee has indicated in his returns that he had declared cut emeralds under the Voluntary Disclosure of Income and Wealth Ordinance, 1975. THEse assets were said to have been acquired during the assessment years 1961-62 to 1970-71, THE value of the same was shown at Rs. 35,330. THE Commissioner of Income-tax, Jaipur, has granted a certificate under Section 8(2) of the said Act on August 10, 1977. THEreafter, these cut emeralds have been contributed as capital in the firm of Chordia Trading Corporation on October 25, 1976, for a sum of Rs. 61,240 and the assessee has claimed before the assessing authority that this is a capital contribution to the firm by the assessee. Even that has been credited in his capital account, But he claimed that no capital gains tax can be levied in view of the decision of the apex court in CIT v. Hind Construction Ltd. [1972] 83 ITR 211. THE claim of the assessee was allowed to the extent that it is a capital contribution, but the Income-tax Officer has treated the transfer under Section 2(47) of the Income-tax Act, 1961, and charged capital gains tax. In appeal, the view taken by the Income-tax Officer has been confirmed by the Appellate Assistant Commissioner, vide its order dated August 14, 1981. Being aggrieved, the assessee has preferred an appeal before the Tribunal. After considering the case of the Karnataka High Court in Addl. CIT v. M.A J. Vasanaik [1979] 116 ITR 110 and the decision of the Gujarat High Court in the case of CIT v. Sunil Sidharthbhai [1981] 131 ITR 42, the Tribunal held that the capital contribution to the firm by the assessee is a transfer within the meaning of Section 2(47) of the Act and liable to capital gains tax.