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TMI Blog2013 (12) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... e-Trust cannot be said to have made the payment of estate duty on behalf of the settler - Decided against Revenue. - R.C.No.53 of 1993 - - - Dated:- 27-9-2013 - Sri Kalyan Jyoti Sengupta And Sri K. C. Bhanu,JJ. For the Applicant : S. R. Ashok, Standing Counsel For the Respondent : Sri S. Ravi ORDER (Per Hon'ble the Chief Justice Sri Kalyan Jyoti Sengupta) This case has been referred under Section 256 of the Income Tax Act, 1961 (hereinafter referred to as 'said Act') by the learned Income Tax Appellate Tribunal, Hyderabad, on the application made by the Revenue by order dated 06-01-1993 for the opinion of this Court on the following questions: 1. Whether, on the facts and in the circumstances of the case, the ITAT is justified in setting aside the orders passed by the CIT, AP-I, under Section 263 of the said Act, consequently restoring the original assessment orders, thereby rejecting the stand of the department to assess the capital gains chargeable to tax arising out of the compensation amount of Rs.30,19,257/- awarded by the State Government on 04-02-1983 for the compulsory acquisition of the property known as Kothi Asafia on 23-09-1981? 2. Whether, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the appropriation of this amount of compensation tantamounts to application of the property of the Trust directly or indirectly for the benefit of the settler and consequently the provisions of Section 13(1)(c) read with Section 13(3) of the said Act were attracted. He, therefore, set aside the assessment orders for both the years and directed the Assessing Officer to re-assess the same by applying the provisions of Section 13(1)(c) read with Section 13(3) and also to bring to chargeability of tax on the heading capital gain arising from the transaction worked out at Rs.19,60,693/- in the total income for the assessment year 1982-83 or 1983-84. The said orders of the Commissioner of Income Tax passed under Section 263 of the said Act were taken to the appellate forum being the Tribunal. The learned Tribunal, after hearing, held that the assessee-Trust cannot be said to have made the payment of estate duty on behalf of the settler. It was also held by the Tribunal that the Commissioner of Income Tax had not held that the Inspecting Assistant Commissioner was wrong to conclude that the Trust had not violated the provisions of Section 13(1)(c) read with Section 13(3) of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herited the property from his grandfather late Nizam Osman Ali Khan and this estate duty was paid in relation to the death of the said Nizam Osman Ali Khan, but not in relation to the settler. Next he contends, citing a decision of Madhya Pradesh High Court in the case of COMMISSIONER OF INCOME TAX v. GOVINDRAM SEKSARIYA CHARITY TRUST [1987] 166 ITR 580, that if the income tax officials below, after considering the factual and legal position, passed an order, the same cannot be revised under Section 263 of the said Act by the Commissioner of Income Tax, and this is not within the purview of the aforesaid Section. In support of his contention, he has also relied on a decision of Madras High Court in the case of VENKATAKRISHNA RICE COMPANY v. COMMISSIONER OF INCOME TAX [1987] 163 ITR 129. 7. We have heard both the learned counsel and considered the factual aspect. 8. In order to give answer to the aforesaid question, the issue involved in this case is whether the recovery of estate duty from the compensation amount can be said to be an expenditure incurred for the benefit of the settler of the Trust to attract the provisions of Section 13(1)(c) read with Section 13(3) of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the property excluding the liability of charge. In other words, charge for payment of estate duty cannot be said to be a property of the Trust. The compensation amount is received with liability. Admittedly here no part of the compensation amount, after deducting the amount of estate duty, was utilised or spent by the assessee-Trust. Hence, we think that, in the facts and circumstances of this case, the mischief of Section 13 sub-section (1) clause (c)(ii) read with Section 13 sub-section (3) of the said Act is not attracted. Thus the benefit under Section 11 of the said Act will be applicable. Consequently, the property acquired by the assessee-Trust and award of compensation amount cannot be taxable. Moreover, we have gone through the judgment of the Tribunal and we think it has been rightly concluded by the Tribunal that the revisional authority did not have any material worth that the Inspecting Assistant Commissioner is wrong to conclude that the Trust had not violated the provisions of Section 13(1)(c)(ii) read with Section 13(3) and consequently, the Assessing Officer should not have extended the benefit of Section 11 of the said Act. 11. It has been rightly contend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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