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Issues involved: Interpretation of amendment in the Income-tax Act, 1961 regarding capital gains tax on sale of jewellery for the assessment year 1973-74.
Summary: The case involved a dispute regarding the applicability of an amendment in the Income-tax Act, 1961 to the assessment year 1973-74. The assessee sold jewellery for Rs. 56,500 during the year 1972-73, claiming no capital gain accrued. However, due to an amendment in section 2(14)(ii) of the Act effective from April 1, 1973, the Income-tax Officer levied capital gains tax on the sale. The assessee's appeals to the Appellate Assistant Commissioner and the Tribunal were unsuccessful. The Tribunal referred the question of law to the High Court under section 256(1) of the Act. The High Court, after considering the precedent set by the Supreme Court in Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262, upheld the Tribunal's decision. The Court emphasized that any amendment in the Act effective from the first day of April of a financial year must apply to the assessments of that year. Therefore, since the amendment in question came into force on April 1, 1973, the capital gain on the sale of jewellery was rightly subjected to tax for the assessment year 1973-74. The Court rejected the argument that specific mention of the assessment year in the amendment was necessary for its applicability, stating that amendments effective from the first day of April apply to assessments for that year. In conclusion, the High Court answered the question in favor of the Revenue and against the assessee, affirming the Tribunal's decision to levy tax on the capital gains from the sale of jewellery. The parties were directed to bear their own costs.
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