Girish Bansal vs. UOI (Delhi High Court)

DATE: April 28, 2016 (Date of pronouncement)
DATE: June 4, 2016 (Date of publication)
AY: 1993-94, 1994-95
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Entire law on concept of "revenue receipt", "capital receipt" and "casual income" explained in the context of taxability of compensation received for cancellation of a sale deed of immovable property. If the AO claims that the receipt is a capital gain, he cannot change his stand to contend that it is a revenue receipt

(i) The Revenue cannot be permitted to shift its stand from one forum to another. The consistent case of the Revenue is to be tested at various levels for its correctness. It is possible that in the interregnum there might be decisions of the Supreme Court which might support or negate the case of the Revenue. That would then have to be taken to its logical end. In the circumstances, the Court is not prepared to permit the Revenue to urge a new plea for the first time in this Court. Having held that it could not be in the nature of capital gain it was not open to the Revenue to seek to bring it to a tax under the revenue receipt.

(ii) Nevertheless, even if one were to test the above plea of the Revenue, it appears to be untenable for a simple reason that the receipt of Rs.20,00,000 by the Assessees was consequent upon the order recorded by the Supreme Court on 28th February 1992 in Civil Appeal No.1003 of 1992. There is no indication in the said order that the said amount constitutes the interest on the sum of Rs.10,05,000 as is sought to be urged by Mr. Singh. On the other hand, in Clause (vi) of the compromise, extracted hereinbefore, there is a specific direction to the High Court to release “the balance of Rs.10,05,000 with the accrued interest to the appellants after satisfying the decree of the fist respondent, namely, Punjab National Bank..” Where the sum had to be paid together with interest, which was to be deposited in the Registry of the Supreme Court, it is not possible to the Court to presume that the said sum constituted the interest on the auction sale consideration that had been paid by the Assessees. Consequently, the Court is not prepared to accept the plea of the Revenue that the above sum of Rs. 20 lakhs constituted revenue receipt in the hands of the Assessees. Not a receipt taxable under Section 10 (3)

(iii) The settled legal position is that all receipts do not constitute income. For a receipt sought to be taxed as income, the burden lies upon the Revenue to prove that it is within the taxing provision. Among the earlier decisions of the Supreme Court is Parimisetti Seetharamamma v. CIT (1965) 57 ITR 532 (SC) where it was held “Whether a receipt is liable to be treated as income depends very largely upon the facts and circumstances of each case; it is open to the income-tax authorities to raise an inference that a receipt by an assembly is assessable income where he fails to disclose satisfactorily the source and the nature of the receipt. But here the source of income was disclosed by the appellant and there was no dispute about the truth of the disclosure.”

(iv) Examined in light of the legal position explained in the above decisions, the Court is of the view that as far as the present case is concerned, the sum of Rs.20 lakhs received by the Assessees was in the context of the cancellation of the sale certificate and the sale deed executed in their favour in relation to an immovable property and neither Assessee was dealing in immovable property as part of his business. While it could if at all be said to be in the nature of a capital receipt, what is relevant for the present case is that the Revenue has been unable to make out a case for treating the said receipt as of a casual and non-recurring nature that could be brought to tax under Section 10(3) read with Section 56 of the Act. Following the decision in Cadell Weaving Mill (supra), there can be no manner of doubt that what is in the nature of capital receipt, cannot be sought to be brought to tax by resorting to Section 10(3) read with Section 56 of the Act.

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