COMMISSIONER OF INCOME TAX Vs. NANALAL TELI

JUDGEMENT

(1.) THIS appeal by the Revenue seeks to challenge the order of the learned Tribunal dt. 7th Feb., 2005, regarding asst. yr. 1993 -94. The Tribunal by the impugned order decided two appeals; other being related to the year 1994 -95 which involved a different controversy. Before the Tribunal appeal was filed by the Revenue, seeking to challenge deletion of Rs. 1.5 lacs on account of sale of mines at Umaty. The AO had made this addition on the basis of the statement of the assessee recorded during survey proceedings, wherein the assessee stated to have sold the mine, allotted to him in the year 1988 -89, in the year under consideration, for a sum of Rs. 1.5 lacs to M/s Kothari Marble Industries, Pasoond, and the Revenue also challenged the deletion of Rs. 50,000, added on account of unexplained investment in the acquisition of mines at Nijarana, which was deleted on the ground that the assessee had Rs. 1.5 lacs with him for such an expenditure, in the absence of any proof on record to show that the assessee had spent this amount anywhere else.

(2.) THE appeal was admitted by framing two substantial questions of law, on 23rd May, 2006, reading as under:

(3.) THE crucial question in the case now is, question No. 1, which relates to the liability of inclusion of Rs. 1.5 lacs in the income of assessee, as 'capital gains' earned from transfer of mine, as a capital asset. The learned Tribunal has held, that the mines are definitely the property of the Government, and allotment is made for mining purposes. The right to leasehold vested in the assessee, and the disputed amount was received by the assessee, on the transfer of the leasehold right of the mining. Then, it has been found, that the provisions of capital gains were not in vogue during the relevant period. It was found, that the receipt is definitely a capital receipt, on capital asset, but in the absence of such provisions at the relevant time, this was not possible to be taxed, because these provisions came into existence only w.e.f. 1st April, 1998, and therefore, the deletion was upheld.