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TMI Blog2011 (4) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant point of time, is also a party to the aforesaid agreement of 25-10-1988, for relinquishment of tenancy rights - Decided in favour of the assessee - 7515 OF 1997, 3003 OF 1999 AND 12950 OF 2001 - - - Dated:- 28-4-2011 - SUDHIR KUMAR KATRIAR AND SAMARENDRA PRATAP SINGH, JJ. D.V. Pathy, Abhi Sarkar and S.N. Sinha for the Petitioner. Harshwardhan Prasad and Ms. Archana Sinha for the Respondent. ORDER Sudhir Kumar Katriar, J. CWJC No. 12950 of 2001 is directed against the order dated 25-1-2001 (Annexure-7), passed by the learned Deputy Commissioner of Income-tax, whereby the income for relinquishment of tenancy rights has been taxed under the provisions of the Income-tax Act, 1961 (hereinafter referred to as `t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the period in question, and had stated as follows in the annexure to the return entitled 'Computation of Total Income': "Note Amount received on account of relinquishment of tenancy rights being in the nature of capital receipts has been credited to the Partners Capital amount in their respective profit sharing ratio." The learned Assessing Officer passed order of assessment on 30-3-1992 (Annexure-3), whereby he accepted the declaration with respect to the amount received on account of relinquishment of tenancy rights. Aggrieved by the adverse portions of the assessment order, the petitioner had preferred appeal which was allowed in part by the learned Commissioner of Income-tax by his order dated 7-12-1992 (Annexure-4). Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 713. He submits in the same vein that, in view of the two authoritative pronouncements, there is no scope for issuance of notice under section 148 of the Act which renders the notice bad in law and, consequently, the impugned order as well. He next submits that M/s. Ashirvad Enterprises and M/s. Poddar Industrial Corporation, the two other similarly circumstanced partners occupying portions of the same premises, and party to the same agreement dated 15-10-1988, have already been granted relief by the learned authorities under the Act. In his submission, therefore, the petitioner cannot be dissimilarly treated. Learned counsel lastly submits that the position has with the insertion of section 55(2) in the Act, with effect from 1-4-1995, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act had been undergone and, therefore, inapplicable to the writ proceeding which has been preferred without exhausting alternative remedies. 5. The following substantial questions of law have been framed for our consideration which includes issues formulated by the Supreme Court: "(i) Whether the impugned notice satisfies the condition precedent or not? (ii) If the condition precedent is satisfied, what appropriate order to be passed? (iii) If the condition precedent is not satisfied, what appropriate order to be passed regarding notice under section 146 of the Income-tax Act, 1961? (iv) Whether the order of the re-assessment under the provisions of section 147 of the Act is prima facie illegal and without jurisdiction ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction as the credit entries in the partners capital account shown to be out of compensation received on account of relinquishment of tenancy rights derived its source from Shri L.N. Poddar who had received the money on account of surrender of tenancy rights and therefore, the credit entries deriving source out of such an exempt source or income would in any case be exempt? (xi) Whether the order of re-assessment is illegal and without jurisdiction as there is no rationale and intelligible nexus between the reasons and the belief? (xii) Whether an order of re-assessment is illegal and without jurisdiction as the condition precedent to the issue of notice under the provisions of section 147 read with section 148 of the Act are not satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer when she passed the impugned order on 25-1-2001. The petitioner's case is entirely covered by the judgment of this Court in Neba Ram Hansraj's case (supra). 7. The same issue was considered by the Supreme Court in D.B. Sandu Bros. Chembur (P.) Ltd.'s case (supra), wherein the law to the same effect has been laid down. In view of the authoritative pronouncements of the Supreme Court and this Court, we reach the conclusion that the money or income derived from relinquishment of tenancy right is capital receipt and cannot, therefore, be subjected to payment of Income-tax. 8. Consequently, CWJC No. 12950 of 2001 succeeds. The impugned order dated 25-1-2001, passed by the learned Deputy Commissioner of Income-tax, is hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X
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