1979 (9) TMI 21 - HC - Income Tax

Summary

Issues involved: Application u/s 256(2) of the I.T. Act, 1961 for determination of questions regarding tenancy, transfer, and capital gain.

Issue 1 - Tenancy as a capital asset:
The assessee, a tenant of a flat in Rutty Engineer House, had the tenancy terminated and became a statutory tenant. Subsequently, the assessee surrendered the tenancy right in exchange for an ownership flat in IL PALAZZO. The question arose whether this transaction constituted a "capital asset" u/s 2(14) of the I.T. Act.

Issue 2 - Surrender of tenancy right and transfer:
The Tribunal had to determine if the surrender of the tenancy right in exchange for the ownership flat constituted a "transfer" u/s 2(47) of the Income-tax Act. The assessee disputed the validity of the notice to quit served by Jolly and Maker Pvt. Ltd., but ultimately vacated the flat and received alternate accommodation.

Issue 3 - Liability for capital gain tax:
The main question was whether the transfer of the tenancy right and the subsequent acquisition of the ownership flat attracted liability for capital gain tax u/s 45 of the Income-tax Act.

The High Court, considering the similarity of facts with a previous case, CIT v. Jehmi Jal Cooper, where a similar application was rejected by the Supreme Court, dismissed the application u/s 256(2) of the I.T. Act. The court found no reason to direct the Tribunal to refer the questions for determination. Consequently, the application was dismissed, and the rule was discharged with costs.