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TMI Blog2011 (4) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 - MR. JUSTICE SUDHIR KUMAR KATRIAR, MR. JUSTICE SAMARENDRA PRATAP SINGH, JJ. For the Petitioners : Mr. D V Pathy, Advocate with M/s Abhi Sarkar and S N Sinha Advocates For the Respondents : Mr. Harshwardhan Prasad Standing Counsel Ms. Archana Sinha, Advocate S K 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 `the Act ). It relates to the assessment year 1989-1990. 2. A brief statement of facts essential for the disposal of the writ petition may be indicated. The pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inquishment 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 30.3.92 (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 7.12.92 (Annexure-4). Aggrieved by this order, the petitioner preferred appeal before the learned Tribunal which was allowed by order dated 9.8.94 (Annexure-5). In other words, the aforesaid declarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 15.10.88, 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, the legal position has perhaps changed as a result of which the income in question may not be taxed with effect from the date of insertion. 4. Learned Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 inasmuch as the particulars of receipt on account of relinquishment of tenancy rights were duly disclosed in the original return of income? (v) Whether the order of re-assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 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 satisfied? 6. We have perused the materials on record and considered the submissions of the learned counsel for the parties. It appears from a perusal of the agreement dt. 15.10.88 that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue was considered by the Supreme Court in C I T vs. D B Sandu Bros. Chembur P. Ltd. (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 set aside. 9. CWJC No.3003 of 1999, as stated hereinabove, challenges issuance of notice under section 148 of the Act, calling upon the petitioner to show-cause as to why the assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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