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TMI Blog1983 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... rch 28, 1970 for a sum of Rs. 23,40,000. After deducting the assessee's cost of Rs. 1,06,855, the capital gains arising out of the said sale was determined by the ITO at Rs. 22,33,145. Before the ITO, the assessee claimed exemption in respect of the entire sum of Rs. 22,33,145 on the only ground that the lands were sold as agricultural land and, therefore, the sale will not attract the levy of tax under the head " Capital gains ". The ITO rejected that claim of the assessee. Therefore, the assessee went before the AAC but without success. Thereafter, the assessee went before the Tribunal. However, before the Tribunal, two contentions were put forward by the assessee. One was that the lands sold being agricultural lands, the sale will not attract the levy of capital gains. The second was that even if the levy of capital gains is exigible on the ground that the lands sold are non-agricultural lands, still, capital gains has to be computed taking the date of conversion of the agricultural land into non-agricultural land as the basis. So far as the first question is concerned, the Tribunal which consisted of a judicial member and an accountant member held that on the materials on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal Bench which heard the appeal first to consider primarily the application of the circular of the Central Board of Direct Taxes referred to above and also whether the land sold was capital asset throughout the period between the date of purchase and the date of sale. The validity of this order has been challenged by the Department in W.P. No. 905 of 1978 mainly on the ground that the third member has no jurisdiction to remit the matter for fresh consideration to the original Bench as such a power is not conferred on the third member under s. 255(4) of the Act. Having regard to the nature of the order passed by the third member, from which one cannot decide as to what is the majority opinion of the Tribunal, the assessee contends that there is a complete deadlock and, therefore, according to the assessee, the orders of the two members of the original Tribunal as also of the third member may be quashed and a direction may be issued for a de novo hearing of its appeal filed before the Tribunal. It cannot be disputed that the jurisdiction of the third member springs from s. 255(4) of the Act and he has no other power inherent or otherwise. Section 255(4) of the Act is to the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity over the two members of the Tribunal and direct them to rehear and dispose of the matter afresh. No doubt, the third member, in this case, happened to be the Vice-President. But that will not clothe him with the power to give directions or remit the matters while functioning under s. 255(4) of the Act. The learned Advocate-General appearing for the assessee would say that s. 255(4) of the Act should be read in conjunction with s. 254(1) of the Act which deals with the powers of the Appellate Tribunal. According to him, the third member to whom the points of difference have been referred, should be taken to have all the powers of the Tribunal under s. 254(1) and as such the Tribunal can pass such orders as it thinks fit. Therefore, the third member has got the power to pass any order as he thinks fit. The submission of the learned Advocate-General is in direct conflict with the language and the object behind s. 255(4) of the Act. When s. 255(4) says that the third member shall decide the points of difference referred to him and the decision of the Tribunal will be as per the majority opinion, the third member is expected to give his decision, whatever it is, so that the majorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is no longer in service and, therefore, he is not in a position to hear the reference. In view of this peculiar situation, the President will nominate or empower any other member of the Tribunal to hear the reference and give his opinion on the points of dispute. Coming to the other two writ petitions, we find that these writ petitions have been filed on the basis that there is a deadlock in view of the order passed by the third member from which it is not possible to find out as to what is the majority opinion of the Tribunal in the appeal filed by the assessee challenging the assessment of the capital gains. The main contention urged by the writ petitioner is that the order of the third member does not contain his opinion, one way or the other, and, therefore, it is not possible to determine as to what is the majority opinion, and since as a result of the order of the third member, the appeal filed by the assessee before the Tribunal cannot be disposed of, it is just and equitable that this court should direct a de novo hearing of the appeal by the Tribunal. But, we have already held that the order passed by the third member expressing no opinion on the points of dispute cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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