judgement:
Civil Appeal No. 608 (NT) of 1975.
From the Judgment and Order dated 8.5.1973 in the High Court of Rajasthan in D.B. Civil Estate Duty Reference No. 46 of 1967.
G.C. Sharma and P.K. Mukharjee for the Appellant.
G. Ramaswami, Additional Solicitor General, Ms. A. Subhashini and K.P. Bhatnagar for the Respondent.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal against the judgment of a Division 212 Bench of the High Court of Rajasthan rendered on a reference made to the Rajasthan High Court under section 64(1) of .
The question referred to the Rajasthan High Court for determination was as follows: Whether on the facts and in the circumstances of the case the provisions of section 10 of the were applicable to this case.
The relevant facts are that one Motilal Sanghi (deceased) made a gift of Rs.1 lac on September 1, 1955 in favour of his four sons.
Each of the sons was given a gift of Rs.25,000.
These amounts were invested by the sons in the firm known as Sanghi Brothers which was constituted by the said Motilal soon after the said gifts were made.
Motilal Sanghi was a partner in the said firm and had an 8 annas share in the firm; each of his four sons had a share of 2 annas in the profits and losses of the firm.
It was stated by learned counsel appearing for the accountable person before the Rajasthan High Court that the firm was managed not by Motilal Sanghi but it was managed by the eldest son, namely, N.K. Sanghi.
Motilal Sanghi died on July 21, 1961.
A question arose whether the sum of Rs.1 lac gifted by him as aforesaid was liable to be included in his estate for purposes of computation of estate duty under the provisions of the .
The Assistant Controller of Estate Duty took the view that the sum was liable to be included in the estate of the said deceased in view of the provisions of Section 10 of the as that amount was not retained by the donees to the entire exclusion of the donor.
An appeal preferred by the accountable person to the Appellant Controller of the Estate Duty was allowed by him holding that Section 10 was not attracted to the circumstances of the case and an appeal preferred by the revenue to the Appellant Tribunal was dismissed.
A reference was, thereafter, made to the High Court at the instance of the revenue.
After considering the provisions of Section 10 of the , the Division Bench of the High court which decided the reference came to the conclusion that the provisions of Section 10 were attracted and the amount in question was liable to be included in the estate of the deceased for the purpose of assessment of estate duty.
The High Court took the view that the said amount gifted by Motilal Sanghi to his sons was brought back into the partnership business of the donor and the donees and hence it was difficult to say that during the continuance of the partnership the donees enjoyed the amounts gifted to the entire exclusion of the donor.
The donor, in one sense or the other, had dominion over that property and that property was utilised both for 213 the benefit of the donor and the donees and hence Section 10 of the was attracted.
Before considering the arguments of the learned counsel, we may note the relevant portion of Section 10 of the .
The said portion runs as follows: "Property taken under any gift, whenever made, shall be deemed to pass on the donor 's death to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thenceforward retained to the entire exclusion of the donor or of any benefit to him contract or otherwise.
" In the present case there is no dispute that when the amount of Rs. 1 lac was gifted by way of gifts of Rs.25,000 to each of the four sons of the deceased they immediately assumed bona fide possession and enjoyment thereof but it is contended by Mr. Ramaswamy, learned Addl.
Solicitor General, that as the said amounts of Rs.25,000 were immediately thereafter invested in a firm of which the donees and the donors were partners it could not be said that those amounts aggregating to Rs.1 lac were retained by the donees to the entire exclusion of the donor.
When the amounts were invested in the partnership in which the donor, namely, the deceased was a partner he got a certain interest and benefit in that amount which was liable to be used for purposes of partnership.
The deceased had a certain dominion over that property as a partner in the said firm and hence it could not be said that the amount gifted was retained by the donees to the entire exclusion of the donor and, in these circumstances, the provisions of Section 10 of the were attracted.
It was, on the other hand, contended by Mr. Sharma, learned counsel for the accountable person, who is the appellant before us, that when the amounts were invested by the donees in the said firm, the interest which the deceased got in the amounts invested by the donees, as a partner of the firm in which the amounts were invested, was in no way related to the gift and hence, merely by reason of that investment, it could not be said that the donees had not retained the said amount to the entire exclusion of the donor for the purposes of Section 10 of the .
It is the correctness of these submissions which has to be examined in the light of the provisions of Section 10 and the decided cases.
In George Da Costa vs CED, analysing the Section 10 of the said Act this court observed as follows: 214 "The crux of the section lies in two parts:(1) The donee must bona fide have assumed possession and enjoyment of the property, which is the subject matter of the gift, to the exclusion of the donor, immediately upon the gift, and (2) the donee must have retained such possession and enjoyment of the property to the entire exclusion of the donor or of any benefit to him, by contract or otherwise.
As a matter of construction we are of opinion that both these conditions are cumulative.
Unless each of these conditions is satisfied, the property would be liable to estate duty under Section 10 of the Act. .
The second part of the section has two limbs: the deceased must be entirely excluded, (i) from the property, and (ii) from any benefit by contract or otherwise.
It was argued for the appellant that the expression 'by contract or otherwise ' should be construed ejusdem generis and reference was made to the decision of Hamilton J. in Attorney General vs Seccombe, ; 1 EDC 589 (KB).
On this aspect of the case, we think the argument of the appellant is justified.
In the context of the section, the word 'otherwise ' should, in our opinion, be construed ejusdem generis and it must be interpreted to mean some kind of legal obligation or some transaction enforceable at law or in equity which, though not in the form of a contract, may confer a benefit on the donor.
" We may also at this stage very briefly refer to two leading cases decided by the Privy Council on a provision analogous to Section 10 of the .
In one of these cases namely, H.R. Munro vs Commissioner of Stamp Duties, ; ; 2 EDC 462 the Judicial Committee held that the property comprised in the transfers was the land shorn of the rights therein belonging to the partnership and was excluded from being dutiable, because the donees had assumed and retained possession thereof, and any benefit remaining in the donor was referable to the partnership agreement entered into earlier than the gifts and not to the gifts.
In that case a father, who was the owner of a large plot of land on which he carried on the business of a grazier, entered into a partnership with his six children to carry on the said business.
The partnership business was to be managed solely by the father, and each partner was to receive a specified share of the profits.
Subsequently, the father transferred by way of gift all his right, title and interest in separate portions of his land to each of his four sons and 215 the trustees of each of his two daughters and their children.
This transfer was subject to the partnership agreement and was on the understanding that any of the partners could withdraw and work the portion of the land gifted to him separately.
The partnership was an oral one and about six years after these deeds of gifts were executed, a written partnership agreement was drawn up during the lifetime of the father under which no partner was entitled to withdraw from the partnership.
On the death of the father, the land which he had transferred by way of gift to his six children was included in his estate in the assessment of death duties under the Stamp Duties Act (N.S.W.) 1920 which contained a provision in pari materia with section 10 of the .
On appeal, the Judicial Committee of the Privy Council held that such inclusion was not justified and laid down the principle which we have set out earlier.
The other leading case in this connection decided by the Privy Council is the case of Clifford John Chick vs Commissioner of Stamp Duties, ; [1959] 37 ITR (ED) 89; The same provision, namely, Section 102 of the New South Wales Stamp Duties Act, 1920 56, came up for consideration in that case.
The facts were that a father transferred, by way of gift, to one of his sons a pastoral property, the gift being made without any reservation or qualification or condition.
Some months later, the son to whom the gift was made and another son of the donor entered into an agreement to carry on in partnership the business of graziers and stock dealers.
The agreement, inter alia, provided that the father should be the Manager of the business and that his decision would be final and conclusive in matters connected with the conduct of the business.
The agreement further provided that the capital of the business would consist of the livestock and plant owned by the respective partners and that the business would be conducted on the respective holdings of the partners and such holdings should be used for the purposes of the partnership only and that all lands held by any of the partners at the date of the agreement should remain the sole property of such partner and should not be deemed to be an asset of the partnership, and such partner should have the sole and free right to deal with it.
Each partner brought into partnership inter alia his livestock and plant, and their combined properties were thenceforth used for the depasturing of the partnership stock.
On the death of the father, the question arose as to whether the land gifted was liable to be added to his estate for the purpose of assessment of death duty.
The Judicial Committee took the view that the land gifted to the son was liable to so included in computation of father 's estate because, although the son has assumed bona fide pos 216 session and enjoyment of the property immediately upon the gift to the entire exclusion of the father, he had not, thenceforth retained the property to the father 's entire exclusion, as under the partnership agreement the partners and each of them were in possession and enjoyment of the property as long as the partnership subsisted, whatever force and effect might be given to that part of the partnership agreement which gave a partner the sole and free right to deal with his own property.
For some years, the principles laid down in Munro 's case and in the case of Clifford John Chick vs Commissioner of Stamp Duties, referred to above, were followed by the courts of this country in construing Section 10 of the .
However, the decision in Chick 's case came up for consideration before this court in CED vs C.R. Ramachandra Gounder, Two different types of property were gifted in Gounder 's case.
The first type of property gifted was a house which the deceased owned and which was let to the firm in which the deceased was a partner as a tenant.
He gifted this house to his two sons absolutely.
After the deed of gift the firm paid the rent not to the deceased but to the donees by crediting the amount in the donees ' accounts in equal shares.
The second type of property gifted consisted of money.
This gift was effected by the deceased by directing the firm in which he was a partner to transfer from his account a sum of Rs.20,000 to the credit of each of his five sons in the firm 's books of account with effect from a particular date.
He gave intimation of this transfer to his sons.
Pursuant to the directions given by the deceased a sum of Rs.20,000 was credited in each of the sons ' account with the said firm.
The amounts remained invested with the firm for which the firm paid them interest.
The deceased continued as a partner of the firm till dissolution.
Within one month of its dissolution, the deceased died.
The question arose as to whether value of the house property and the sum of Rs. 1 lac should be included in the property deemed to pass on the death of the deceased under Section 10 of the .
The Court held that neither the house property nor the sum of Rs.1 lac could be deemed to pass under Section 10.
Jaganmohan Reddy, J. who spoke for the court said (page 452 of the report): "There is no doubt, on the facts of this case, the first two conditions are satisfied because there is an unequivocal transfer of the property and also of the money, in the one case by a settlement deed, and in the other by crediting the amount of Rs.20,000 in each of the sons ' account with the 217 firm which thenceforward became liable to the sons for the payment of the said amount and the interest at 7 1/2 % per annum thereon.
" As far as the house property was concerned, it was observed that the donor, on the day when he gifted the property to his sons, which property was leased out to the firm, had two rights, namely, of ownership in the property and the right to terminate the tenancy and obtain the possession thereof.
There is no dispute that the ownership had been transferred, subject to the tenancy at will granted to the firm, to the donor 's two sons because the firm from thenceforward had attorned to the donees as their tenant by crediting rent of Rs.300 to the respective accounts in equal moiety.
The donor, could, therefore, only transfer possession of the property which the nature of that property was capable of, which in that case was subject to tenancy.
What is pertinent to note in the case is that this Court took the view that "the benefit the donor had as a member of the partnership was not a benefit referable in any way to the gift but is unconnected therewith".
This decision shows that the principle laid down in Chick 's case was departed from by the Court in cases in which the property gifted was brought into a partnership in which the donor had an interest merely as a partner.
The decision in Gounder 's case was followed by this court in CED vs N.R. Ramarathnam, and several other decisions.
An analysis the decision of Supreme Court in Gounder 's case, in our opinion, shows that the Supreme Court in that decision referred to Munro 's case and also referred to Chick 's case.
It, however, made a certain departure from the principle laid down in Chick 's case.
This would appear clear from the decision of this Court in CED vs Kamlavati, [11979] and CED vs Jai Gopal Mehra 's, cases.
Both these decisions involved the question of applicability of Section 10 of the .
In Kamlavati 's appeal, the facts were that Maharaj Mal, the deceased, was a partner in a firm which carried on business under the firm name and style of M/s Maharaj Mal Mana Raj.
Maharaj Mal had one half share in the partnership, and the other two partners had one fourth share each.
Maharaj Mal made a gift of Rs.1 lac to his son, Lalit Kumar, and of Rs.50,000 to his wife Kamlavati.
In the books of account of the firm the sums of Rs. 1 lac and Rs.50,000 were debited to the account of Maharaj Mal and credited to the accounts of the son and wife respectively.
Almost simultaneously the son was taken as a partner in the said firm by giving him one fourth share out of the 218 one half share of Maharaj Mal.
On the death of different partners the firm was reconstituted and some other partners admitted.
On the death of Maharaj Mal the question arose regarding the applicability of Section 10 of the said Act.
In the other appeal, namely Jai Gopal Mehra 's appeal the deceased donor made gifts of Rs.20,000 each in favour of his son and four daughters in law.
Thereafter, the donees invested the sums gifted to them in the partnership firm in which the deceased was a partner.
The donees were not partners in the firm nor were they taken as partners after the gifts were made in their favour.
When the case came up in a reference before a Full Bench of the Punjab and Haryana High Court , it answered the reference in favour of the accountable person, namely, Jai Gopal Mehra.
The decision in Kamlavati 's case merely followed the Full Bench decision in Jai Gopal Mehra 's case.
In its judgment the Supreme Court first dealt with the appeal in Kamlavati 's case and after referring with approval to the analysis of Section 10 of the in George Da Costa vs CED, it referred to the decision in Chick 's and Munro 's cases.
It then turned to the earlier decision of the Supreme Court in Gounder 's case.
After setting out the later part of the passage in its judgment in that case, which we have quoted earlier, the Supreme Court observed that: "It should be noticed that, though not explicity but implicitly, some departure was made from the ratio of the Privy Council in Chick 's case (1959) 37 ITR (ED) 89; ; when the principle of Munro 's case ; ; 2 EDC 462 (PV) was applied, it was on the basis that what was gifted by the donor was the whole of the property minus the rights of the partnership which were shared and enjoyed by the donor also; the donor enjoying the same bundle of rights in the partnership which he was enjoying before the gift did not bring the case within the ambit of Section 10.
But the implicit departure from Chick 's case was when it was said that the benefit the donor had as a member of the partnership was not a benefit referable in any way to the gift but is unconnected therewith.
The departure can be attributed to the very subtle distinction in the facts of the two cases and it is necessary to highlight them.
In Chick 's case, the donor as a partner came to share the possession and enjoyment of the property by the partnership firm long after the gift, while in Gounder 's case the benefit which the donor was enjoying as a partner in the property gifted was existing at the time of the gift itself and continued to exist even thereafter. . ." 219 It is important to note that the principle in Munro 's case was applied in the case of Jai Gopal Mehra, although, the donees invested the amounts gifted in the firm in which the donor was a partner after the gifts were made.
The same Bench which decided Gounder 's case followed it in the case of CED vs N.R. Ramarathnam.
In this case, the facts in relation to the gifts of money by the donor in favour of his three sons and the daughter were materially similar to those of Gounder 's case except that the three sons and daughter were also partners in the firm.
Yet applying the ratio in Gounder 's case it was held that the amounts gifted were not chargeable to Estate Duty under section 10.
In Kamlavati 's case, this Court referred the decision of this Court in CED vs R.V. Viswanathan, and observed as follows: "In other words, the mere fact that the partnership may make use of the sums of money gifted in which the donor also was a partner did not mean that he was allowed to enjoy or derive any benefit in the money gifted, which could be referable to the gift itself." The Court clarified the position as follows (P463): "When a property is gifted by a donor the possession and enjoyment of which is allowed to a partnership firm in which the donor is a partner, then the mere fact of the donor sharing the enjoyment or the benefit in the property is not sufficient for the application of Section 10 of the Act until and unless such enjoyment or benefit is clearly referable to the gift, i.e. to the parting with such enjoyment or benefit by the donee or permitting the donor to share them out of the bundle of rights gifted in the property.
If the possession, enjoyment or benefit of the donor in the property is consistent with the other facts and circumstances of the case, other than those of the factum of gift, then it cannot be said that the donee had not retained the possession and enjoyment of the property to the entire exclusion of the donor in any benefit to him by contract or otherwise.
" The court pointed out that distinction between the capital of the 220 partnership and the property of the partnership and that whether an amount forms the part of the capital of the partnership or part of its property, it does not belong to co partner in the sense of his being a co owner.
(Page 464 of 120 ITR (1979).
Even in the recent decision of this Court in CED vs Godavari Bai, [1986] 158 ITR p. 683 where the decision in the Chick 's case has been cited and discussed at some length, the decisions in Kamlavati 's and Jai Gopal Mehra 's cases have been referred to without any indication that the ratio of the same was not accepted as good law.
In fact, that decision has been referred to as one in which the principle in Chick 's case was applied.
In the case before us the deceased gifted Rs.25,000 to each of his four sons and almost immediately thereafter the firm of Sanghi Brothers was constituted as aforesaid in which the said four sons invested Rs.25,000 each received from the father.
As already pointed out, the father as well as the sons had shares in the said partnership.
Applying the decision in the case of Kamlavati and Jai Gopal Mehra, discussed at some length by us earlier, it must be held that the interest which the deceased father retained or obtained in the aggregate sum of Rs. 1 lac invested by the said four sons in the said firm, was an interest merely as a partner in the said firm and was not related to the gifts made by him to his said sons.
In these circumstances it cannot be said that by reason of constitution of said partnership and the investment of the said amounts by the sons in the partnership the donees sons had not assumed bona fide possession and the enjoyment of the amounts gifted to them or that they had not retained the same to the entire exclusion of their father.
In our opinion, the said amount of Rs.1 lac could not be included in the estate of the said deceased under the provisions of Section 10 of the .
In our view the Division Bench of the High Court was in error in applying the ratio of decision in Chick 's case to the present case and holding that the said amount of Rs.1 lac was liable to be included in the estate of the said deceased for the purposes of computation of estate duty in view of the provisions of Section 10 of the said Act.
The learned judges of the High Court have, with respect, failed to appreciate the true effect of the decision of this Court in Kamlavati 's case and failed to appreciate that the interest which the donor retained in the amount gifted, and invested by the donees in the partnership in which the donor was a partner is not an interest which can be said to be related to the gift.
221 In the result, the appeal is allowed.
In our opinion, the question which was referred to the High Court for determination, which we have set out earlier, must be answered in the negative and in favour of the accountable person (appellant).
The respondent must pay the costs throughout.
R.S.S. Appeal allowed.

summary:
One Motilal Sanghi made a gift of Rs.25,000 each to his four sons, on September 1, 1955.
These amounts were invested by the sons in the firm known as Sanghi Brothers which was constituted by the said Motilal soon after the gifts were made.
Motilal Sanghi had an 8 annas share in the firm; the four sons had a share of 2 annas each.
Motilal Sanghi died on July 21, 1961.
The Assistant Controller of Estate Duty took the view that the sum of Rs.1 lac was liable to be included in the estate of Motilal Sanghi in view of the provisions of Section 10 of the Estate Duty Act as that amount was not retained by the donees to the entire exclusion of the donor.
The Appellate Controller, however, held that section 10 was not attracted to the circumstances of the case.
the Division Bench of the Rajasthan High Court in a reference made to it held that section 10 was attracted.
It took the view (1) that the said amount was brought back into the partnership business of the donor and the donees and hence it was difficult to say that during the continuance of the partnership the donees enjoyed the amounts gifted to the entire exclusion of the donor and (2) that the donor, in one sense or the other, had dominion over that property, and the property was utilised both for the benefit of the donor and the donees.
Before this Court it was contended by the appellant that when the amounts were invested by the donees in the said firm, the interest which the deceased got in the amounts invested by the donees, as a partner of the firm, was in no way related to the gifts and hence, merely by reason of that investment, it could not be said that the donees had not retained the said amount to the entire exclusion of the donor for the purposes of section 10.
It was, on the other hand, contended on behalf of the respondent that as the said amounts were immediately thereafter invested in the firm, it could not be said that the amounts were retained by the donees 211 to the entire exclusion of the donor who had a certain dominion over that property as a partner.
Allowing the appeal, this Court, ^ HELD: (1) The interest which the deceased father retained or obtained in the aggregate sum of Rs.1 lac invested by the said four sons in the said firm, was an interest merely as a partner in the said firm and was not related to the gifts made by him to his sons.
[220D E] (2) It cannot be said that by reason of constitution of the said partnership and the investment of the said amount by the sons in the partnership, the sons had not assumed bona fide possession and the enjoyment of the amounts gifted to them or that they had not retained the same to the entire exclusion of their father.
[220E F] (3) The said amount of Rs.1 lac could not be included in the estate of the said deceased under the provisions of section 10 of the Estate Duty Act.
[220G] George Da Costa vs CED, ; H.R. Munro vs Commissioner of Stamp Duties, ; ; 2 EDC 462; Clifford John Chick vs Commissioner of Stamp Duties, ; (1959) 37 ITR (ED) 89; ; CED vs C.R. Ramachandra Gounder, ; CED vs N.R. Ramarathnam, ; CED vs Kamlavati and CED vs Jai Gopal Mehra, ; CED vs R.V. Viswanathan, and CED vs Godavari Bai, referred to.


judgement:
Civil Appeal Nos.
2705 & 5383 of 1985.
From the Judgment and Order dated 20.12.1984 of the Delhi High Court in Writ Petition No 4037 and 4038 of 1982.
L.M. Singhvi, Kailash Vasdev, G.L. Rawal, Ms. Neerja, Sandeep Narain, R. Narsimha.
Abhishek Manu Singhvi and C. Mukhopadhya for the Appellants.
955 T.S.K.M. Iyer, R.P. Srivastava and C.V.S. Rao for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
These appeals by certificate are directed against the common judgment of a full Bench of the Delhi High Court dated December 20, 1984, in two writ petitions under Article 226 of the Constitution.
The appellants are respectively a Company and its Managing Director.
The Company was the holder of Letter of Authority in respect of three licences for import of coconut oil in one case and of two licences in the other and was appointed Letter of Authority Holder in respect of the said licences.
It imported two consignments of 5342.369 Mts.
and 3002.557 Mts. of refined industrial coconut oil from Sri Lanka and the delivery port was Kandla.
The respective ships carrying the aforesaid cargo arrived at the port of destination on 22nd September, 1982, and 10th September, 1982, and appellant No. 1 filed the bills of entry for release of the said cargo in the office of the Assistant Collector of Customs at Kandla.
Instead of release of the cargo on the basis of steps taken by appellant No. 1, notices to show cause were received by appellant No. 1 on the allegation that import of industrial coconut oil was not legal as it was a canalised item.
The appellant No. 1 was called upon to show cause as to why the cargo may not be confiscated under section 111(d) of the as also why the appellants may not be penalised under section 112 thereof.
The appellants showed cause and took the stand that import of industrial coconut oil was not banned under the Import Policy of the Government for the relevant period and the premises upon which the authorities had proceeded to direct issue of show cause was factually untenable.
When personal hearing was afforded, on behalf of the appellant No. 1 it was pointed out that the notices by respondent No. 3 were the outcome of bias and the said statutory authority had not applied his own mind to the matter in controversy.
It was also pointed out that Shri Takhat Ram, Joint Chief Controller of Imports and Exports had taken undue interest in the matter to the prejudice of the appellants and had brought to bear upon the statutory authority pressure to act against the interests of the appellants.
By the adjudication orders dated 17th December, 1982 and 20th December, 1982, the respondent No. 3 came to the conclusion that "coconut oil, whether edible or not, were canalised items and fell within the ambit of Appendix 9 para 5(1) of the Import Policy of 1980 81.
It was not an item under the O.G.L. of 1980 81 Policy".
Respondent No. 3 further held that either of the consignments was covered by the import 956 licences produced by the appellants and was, therefore, liable to be confiscated under section 111(d) of the Act but gave an option to appellant No. 1 to redeem the goods on payment of Rs.3 crores and Rs.2 crores respectively as redemption fines.
On 27.12.1982 two writ petitions were filed in the High Court of Delhi challenging the action of the Collector.
The said writ petitions were finally placed before a Bench of three Judges of the High Court; two of them being Sachar and Khanna, JJ., came to hold that the writ petitions were liable to be dismissed while the other Judge being Wad, J. took the view that the action of the Collector was totally untenable and that the writ petition should be allowed and the order of the Collector should be set aside.
The majority of the learned Judges were of the further view that the quantum of redemption fine should be considered by the Appellate Tribunal.
Sachar, J. with whom Khanna J. concurred, directed: "I would in the circumstances remit the matter to the Appellate Tribunal but only on the question of consideration of the question of quantum of redemption fine.
The Appellate Tribunal could hear and dispose of this matter as if it was hearing an appeal filed by the petitioners but, only on the question of quantum of redemption fine.
" In the absence of any challenge, this part of the order of the High Court has become final and has to operate irrespective of the fate of the two appeals.
The following common contentions have been advanced by learned counsel for the appellants: (1) The import policy of which year would be applicable to the facts of the present case the period during which the licences were issued or the time when import actually took place.
(2) Whether "coconut oil" appearing in para 5 of Appendix 9 of the Import Policy of 1980 81 was confined to the edible variety or covered the individual variety.
(3) Whether in the face of the decision of the Board and Central Government as the statutory appellate and revisional authorities, it was open to the Collector functioning in lower ties to take a contrary view of the matter in exercise of quasi judicial jurisdiction; and 957 (4) Whether the order of the Collector was vitiated for breach of rules of natural justice, and collateral considerations in the making of the orders.
It is not in dispute that the relevant import policy to be referred to is of the year 1980 81 as all the licences were issued during that period.
The Collector found and the High Court has not recorded a different finding that when the licence was first revalidated on 18.1.1982, such revalidation was subject to paragraph 215 of the Import Policy of 1981 82.
Again while revalidating some of the licences on 25.9.1982, it was stipulated that during the extended period, items which do not appear in Appendix 5 and 7 of Import Policy of 1982 83 could not be allowed to be imported and items which appear in Appendix 26 of the Import Policy of 1982 83 will also not be allowed to be imported.
The Collector turned down the plea that the licences allowed the import of items appearing in Appendix 5 and 7 of 1979 80 policy and 1982 83 policy in addition to the items appearing in the OGL and Industrial coconut oil.
In the instant case, the licences were of either of 1980 or 1981 and were revalidated from time to time.
For convenience we may refer to a sample order of revalidation dated 28.6.1982.
Revalidation was subject to the following conditions: "This licence is revalidated for a further period of six months from the date of revalidation with the condition that during the extended period of validity the items which do not appear in Appendix 5 and 7 of the Import Policy of 1982 83 will not be imported.
This licence will also not be valid for the import of items appearing in Appendix 26 of the Import Policy of 1982 83 during the extended period of validity.
" The High Court has come to the correct conclusion that the terms of the import policy of 1980 81 would apply to the facts of these cases.
The basic question is whether at the relevant time, import of coconut oil had become canalised through the State Trading Corporation ( 'STC ' for short).
Rule 3 of the Imports (Control) Order, 1955 made under the Imports and Exports (Control) Act, 1947 provides: "3(1) Save as otherwise provided in this order, no person shall import in case of the descriptions specified in Schedule I except under and in accordance with the licence 958 or a custom 's clearance permitting grant by the Central Government or by any officer specified in Schedule II.
" Para 5 of Appendix 9 ran thus: "In the case of the various items mentioned therein, import will be made only by the State Trading Corporation of India on the basis of foreign exchange released by the Government in its favour.
The items mentioned therein are.
" It is thus clear that if 'coconut oil ' of the industrial variety was covered by paragraph 5 of Appendix 9, then it would not have been included in Appendix 10 and, therefore, could not have been imported under OGL.
In Appendix 9, no classification of coconut oil is given and; therefore, all varieties of coconut oil should be taken as covered by the term.
There is no warrant for the assumptions that item 1 of paragraph 5 of Appendix 9 covered only the edible variety when 'coconut oil ' as such has been mentioned.
It is not disputed that 'coconut oil ' without anything more could cover both the edible as also the non edible (commercial or industrial) varieties.
When a customer goes to the market and asks for coconut oil to buy, he is not necessarily supplied the edible variety.
Coconut oil is put to less of edible use than non edible.
Reliance has been placed on the entry in the Import Policy of 1981 82 where in paragraph 5 of Appendix 9 it has been said thus: "In the case of the following items, whether edible of non edible, import will be made only by the S.T.C. . (1) Coconut oil. . . . . ." "All other oils/seeds, whether edible or non edible, not specifically mentioned above or elsewhere in this policy, will also be imported only by S.T.C. under these provisions.
" In our view no support can be had for the contention advanced by appellants ' learned counsel from the change in the language of paragraph 5 in the Import Policy of the subsequent year.
Whatever may have been the reason for specifying 'edible and non edible ' classification in 1981 82, if 'coconut oil ' takes within its fold all varieties of it, it must follow that in 1980 81, all varieties of coconut oil were 959 included in paragraph 5 of Appendix 9.
It is, in our opinion, unnecessary to refer to authorities and precedents to support such an obvious conclusion.
Similarly no support is available from the communication by way of reply received by the appellants from the S.T.C. to the effect that import of edible coconut oil alone was canalised through it.
When the question before us is as to what exactly was the ambit of the entry No. 1 in paragraph 5 of appendix 9, the letter of the S.T.C. has no light to throw and the matter has to be ressolved with reference to broader aspects than the letter of the Corporation.
Nor can that letter or the representation contained therein be used to build up a plea of estoppel.
The S.T.C. was not competent to bind the customs authorities in respect of their statutory functioning and if on actual interpretation it turns out that 'coconut oil ' covered what the appellants have imported, the fact situation cannot take a different turn on account of the letter of the S.T.C.
At the most, it may have some relevant when the quantum of redemption fine is considered by the Tribunal in terms of the direction of the High Court.
Massive arguments were built up by learned counsel for the appellants on the basis that the decision of the Central Board and the Central Government rendered in similar matters were binding on the collector and he could not have acted to the contrary.
Several precedents have been cited during the hearing.
In a tier system, undoubtedly decisions of higher authorities are binding on lower authorities and quasi judicial Tribunals are also bound by this discipline.
In Broome vs Cassell and Co., ; , the Lord Chancellor delivering the opinion of the House observed: "I hope it will never be necessary to say so again that in the herichical system of courts which exists in this country, it is necessary for each lower tier, including the Court of Appeal, to accept loyally the decisions of the higher tiers." This Court in Kaushalya Devi Bogra vs Land Acquisition officer, has clearly approved this position.
There is aubundance of authority that quasi judicial tribunals too are bound by this rule.
That, however, does not assist the appellants at all.
It may be that the Collector of Customs should have felt bound by the decision of 960 the Board or the Central Government but the matter has passed that stage.
What we are now concerned with is not disciplining the Collector in his quasi judicial conduct but to ascertain what the correct position in the matter is.
Very appropriately, appellants ' learned counsel has not found fault with the High Court for not following the quasi judicial opinion of the Board or the Central Government nor has he pleaded for acceptance of that by us as a precedent.
Once on analysis we reach the conclusion that 'coconut oil ' of every description was covered in paragraph 5 of appendix 9, the quasi judicial decision ceases to be relevant.
We propose to say no more on this aspect of the submission.
What survives for consideration is the argument relating to the vice of breach of natrual justice and the vice of collateral pressure of the Import Authorities in the making of the order.
We must frankly state that this aspect of the argument has not at all impressed us.
It has not been disputed that show cause notices were issued, cause was shown and considered by the statutory authorities.
It may be that more of opportunities than extended were expected by the appellants in view of the fact that large stakes were in issue.
The observance of the Rules of Natural Justice is not referable to the fatness of the stake but is essentially related to the demands of a given situation.
The position here is covered by statutory provisions and it is well settled that Rules of Natural Justice do not supplant but supplement the law.
We have not been able to find any breach in the compliance of the statutory procedure.
We are not inclined to agree that the role played by Sri Takht Ram vitiated the order of the Collector.
All the contentions fail and these appeals are, therefore, dismissed.
The respondents are entitled to their costs throughout.
S.L. Appeals dismissed.

dataset_name: IN-Abs

summary:
The appellants are a Company and its Managing Director.
The Company imported two consignments of refined industrial Coconut oil.
The ships carrying the aforesaid cargo arrived at the port of destination on 10th September, 1982 and 22nd September, 1982.
The appellant No. 1 filed the bills of entry for release of the said cargo in the office of the Assistant Collector of Customs.
Instead of release of the cargo, notices to show cause were received by the appellant on the allegation that the import of industrial coconut oil was not legal as it was a canalised item.
The appellant No. I was also called upon to show cause as to why the cargo should not be confiscated under section 111(d) of the and also as to why he should be not penalised under Section 112 thereof.
The appellant showed cause and took the stand that import of industrial coconut oil was not banned under the import policy of the Government for the relevant period.
When personal hearing was afforded, it was also pointed out that the notices issued by Respondent No. 3 were the outcome of bias, and that the Joint Chief Controller of Imports and Exports had taken undue interest in the matter.
By the adjudication orders dated 17th December, 1982 and 20th December, 1982, the respondent No. 3 came to the conclusion that 953 "coconut oil", whether edible or not, were canalised items and fell within the ambit of Appendix 9 Para 5(1) of the Import Policy of 1980 81, and that it was also not an item under the o.
G.L. of 1980 81 Policy.
It was held that the items that were imported were liable to be confiscated under section 111(d) of the , but an option was given to redeem the goods on payment of Rs.3 crores and Rs.2 crores respectively as redemption fines.
The appellants filed two Writ Petitions challenging the action of the Collector.
The Writ Petitions were heard by a Full Bench of the High Court.
Two Judges held that the writ petitions were liable to be dismissed, while the third Judge took the view that the action of the Collector was totally untenable and that the writ petitions should be allowed and the order of the Collector should be set aside.
The majority of the Judges were also of the view that the quantum of redemption fine should be considered by the Customs Appellate Tribunal.
In the appeals to this Court it was contended on behalf of the appellants: (1) The import policy of which year would be applicable the period during which the licences were issued or the time when import actually took place.
(2) Whether "coconut oil" appearing in para 5 of Appendix 9 of the Import Policy of 1980 81 was confined to the edible variety or covered the industrial variety.
(3) Whether in the face of the decision of the Board and Central Government as the statutory appellate and revisional authorities, it was open to the Collector functioning in lower tier to take a contrary view of the matter in exercise of quasi judicial jurisdiction, and (4) Whether the orders of the Collector were vitiated for breach of rules of natural justice, and collateral considerations in the making of the order.
Dismissing the Appeals, ^ HELD: 1.
The High Court has come to the correct conclusion that the terms of the Import Policy of 1980 81 would apply to the facts of these cases.
[957F] In the instant case, the licences were either of 1980 or 1981 and were revalidated from time to time subject to the condition that items which do not appear in Appendices 26, 5 and 7 of the Import Policy of 1982 83 will not be imported.[957D] 2(a) Whatever may have been the reason for specifying 'edible and non edible ' classification in 1981 82, if 'coconut oil ' takes within its 954 fold all varieties, it must follow that in 1980 81, all varieties of coconut oil were included in paragraph 5 of Appendix 9.
[958H;959A] (b) If 'coconut oil ' of the industrial variety was covered by paragraph 5 of Appendix 9 then it would not have been included in Appendix 10 and, therefore, could not have been imported under OGL.
[958C] (c) In Appendix 9, no classification of coconut oil is given and, therefore, all varieties of coconut oil should be taken as covered by the term.
[958D] (d) When a customer goes to the market and asks for coconut oil to buy, he is not necessarily supplied the edible variety.
Coconut oil is put to less of edible use than non edible.
[958E] (e) The S.T.C. was not competent to bind the customs authorities in respect of their statutory functioning, and if on actual interpretation it turns out that 'coconut oil ' covered what the appellants have imported, the fact situation cannot take a different turn on account of the letter of the S.T.C.
At the most, it may have some relevancy when the quantum of redemption fine is considered by the Tribunal.
[959C D] 3.
In a tier system, undoubtedly decisions of higher authorities are binding on lower authorities and quasi judicial Tribunals are also bound by this discipline.
However, what the Court is now concerned with is not disciplining the Collector in his quasi judicial conduct, but to ascertain what the correct position in the matter is.
[959H;960A B] 4.
The observance of Rules of Natural Justice is not referable to the fatness of the stake but is essentially related to the demands of a given situation.
The position here is covered by statutory provisions and it is well settled that Rules of Natural Justice do not supplant but supplement the law.
[960D E] Broome vs Cassell & Co., ; referred to.


judgement:
Civil Appeal Nos. 61315 of 1975.
From the Judgment and Order dated 18.8.1973 of the Madhya Pradesh High Court in M.C.C. No. 248 of 1968.
S.T. Desai, Joel Pares and A.K. Verma for the Appellant.
S.C. Manchanda, K.C. Dua and Miss A. Subhashini for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal against the judgment of a Division Bench of the High Court of Madhya Pradesh on a reference made to the High Court under Section 66(1) of the Indian Income tax Act, 1922 (referred to hereinafter as "the said Act").
The appeal has been preferred on a certificate of fitness granted by the High Court under Section 66A(2) of the said Act read with Article 133(1) of the Constitution of India.
The relevant facts are as follows: The assessee is a Hindu Undivided Family represented by its Karta one R.K. Palshikar.
The years of assessment with which we are concerned are the assessment years 1959 60 to 1961 62.
The assessee is the owner of what is known at present as 'Palshikar Colony ' at Indore.
This colony covers an area of 36.62 acres.
The said land originally belonged to an ancestor of the present Karta as agricultural land.
The land was in the possession of the tenants and crops like wheat, gram and so on were grown on the said land by the tenants.
The present Karta wished to develop the land into a housing colony and took steps to evict the tenants.
For this purpose he filed a suit in the High Court and on September 24, 1957 that suit was decreed.
The assessee got plans drawn up for the laying out of the said land as a housing colony in the year 1952 after the assessee was permitted to develop the land into a housing colony.
In 1958, the Executive Engineer of 992 Indore approved the revised lay out plan.
The assessee then divided the land into plots and developed the land for making it suitable as building sites.
The assessee also constructed some roads, sewages and water pipe lines and spent a large amount for developing the land.
This expenditure was incurred in the accounting period 1958 59 and the subsequent years.
The assessee started leasing building sites to various parties from May, 1958.
The first lease was granted by the assessee, demising plot No. 12 on May 24, 1958.
That lease was for a period of 99 years.
It was agreed under the lease deed that on the expiration of the said period of lease, the lessor by his legal heirs will execute a new lease deed in favour of the lessee or his legal heirs on terms and conditions as would be settled later.
The 'salami ' or premium for the said lease was fixed at Rs.10,312, out of which amount Rs.501 was paid in advance and the balance amount of Rs.9,811 was agreed to be paid before the grant of lease.
The agreement of lease was executed on September 15, 1959.
The annual lease rent of the plot was fixed at Rs.75 which was to be paid by the lessee in advance.
The lessor reserved his right to take back possession of the land leased if the rent was not paid for two consecutive years and to recover the rent.
We are not concerned with the other terms of the lease.
In the years 1959 60, 1960 61 and 1961 62 with which we are concerned, the assessee leased out respectively 3.29 acres, 4.41 acres and 5.68 acres divided into many plots out of the aforesaid land and he received by way of 'salami ' or premium Rs.1,45,190, Rs.2,06,475 and Rs.2,54,341 respectively in the said years.
The terms and conditions of the other leases were in pari materia with the aforesaid lease dated May 24, 1958 in that the leases were for a period of 99 years and provided for the payment of premium or 'salami '.
The question arose whether the assessee was liable to pay capital gains tax on the amounts of 'salami ' or premium received as aforesaid.
The contention of the assessee before the Income tax Officer concerned was that no capital gains tax could be levied in respect of the said leases as the land was agricultural land and secondly that Section 12 B of the said Act which provided for the levy of tax on the sale, exchange, relinquishment or transfer of a capital asset did not come into play as only lease hold rights had been conveyed by the assessee to the lessees under the said leases.
Both these contentions were rejected by the Income tax Officer as well as by the Appellate Assistant Commissioner.
The assessee preferred an appeal to the Income tax Appellate Tribunal and urged the same contentions, which the Tribunal also rejected.
993 Arising from the said decision of the Tribunal, two questions were referred to the High Court for determination.
These questions are as follows: (1) Whether on the facts and in the circumstances of the case, the land sold by the assessee constituted a capital asset within the meaning of Section 12 B of the Indian Income Tax Act or was agricultural land as defined in Section 2(4A) of the Act? (2) Whether the transaction of lease effected by the assessee amounted to a transfer within the meaning of Section 12 B so as to attract liability for capital gains tax? The first contention urged by the assessee before the High Court was that no capital gains tax could be levied on the said transactions for the lease of the land as the land was agricultural land, and the second contention was that Section 12 B of the said Act did not come into play as only the lease hold rights in the said lands had been conveyed.
As far as the first contention is concerned, it was conceded before the High Court that as the land was diverted to non agricultural purposes several years ago, that contention could not be pressed and it was not disputed that the lands in question constituted a capital assets within the meaning of Section 2(4A) of the said Act.
In support of the second contention of the assessee, it was urged on behalf of the assessee that the word "transfer" under Section 12 B of the said Act must be interpreted in a limited and restricted sense and the principle of ejusdim generis should be applied in construing the said word as used in Section 12 B.
This contention was rejected by the High Court which took the view that, as the lease was for a long period of 99 years, the agreement of lease would amount to a transfer of a capital asset within the meaning of Section 12 B of the said Act read with Section 2(4A) thereof.
The High Court answered both the questions referred in the affirmative and against the assessee.
On an application made by the assessee, leave was granted by the High Court, as aforesaid, to appeal to this Court but only in respect of second question.
Before setting out the contentions of the respective parties it will be useful to take note of the relevant portion of Section 12(B) of the said Act which provides for the levy of tax on capital gains runs thus: "The tax shall be payable by an assessee under the head "Capital gains" in respect of any profit or gains arising 994 from the sale, exchange, relinquishment or transfer of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, relinquishment or transfer took place.
" There are two provisos to the aforesaid sub section, but they are not relevant for our purposes.
Rest of the provisions of Section 12 B are also not relevant for our purposes.
The term "Capital asset" has been defined in Sub section (4A) of Section 2 of the said Act, as follows: "capital asset" means property of any kind held by an assessee, whether or not connected with his business, profession or vocation, but does not include: (i) any stock in trade, consumable stores or raw materials held for the purposes of his business, profession or vocation; (ii) personal effects, that is to say, movab le property (including wearing apparel, jewellery and furniture) held for personal use by the assessee or any member of his family dependent on him.
(iii)any land from which the income derived is agricultural income; The first contention which was urged before us by Mr. Desai, learned counsel for the appellant assessee is that, in the present case, Section 12 B of the said Act can have no application as the land in question was Inam land which must have been granted as a pure gift to the ancestor of the assessee.
It was submitted by him that the facts on record show that the land was granted by the Maharaja of Indore as Inam to the concerned ancestor of the present Karta and it was urged by him that in accordance with the usual practice, the Maharaja must have given it free.
It was submitted that Section 12 B of the said Act is applicable only in case of assets where there was a cost of acquisition.
In support of this contention Mr. Desai cited some judgments including the decision of this Court in C.I.T. vs Srinivasa & Setty, ; which was a case pertaining to goodwill.
It was, on the other hand, submitted by Mr. Manchanda, that it was not open to Mr. Desai to raise this contention at all as it did not arise out of the decision of 995 the Tribunal and was not reflected in the questions referred by the Tribunal, and particularly in the question in respect of which certificate of appeal has been granted.
In our view, the submission of Mr. Manchanda must be upheld.
The question in respect of which certificate of fitness has been granted, clearly relates to one controversy, namely, whether the provisions of Section 12 B of the said Act can be brought to play in this case as the transfer is of lease hold interest in immovable property for 99 years and not an outright sale of transfer of the complete interest of the transferor in the immovable property.
The question as to whether Section 12 B can be brought into play where the property sold has not cost anything to acquire as it was gifted or was not urged before any of the Income tax authorities nor before the Tribunal or even before the High Court.
That question has not in any way been covered by the decision of the Tribunal or the High Court.
In Commissioner of Income Tax, Bombay vs Scindia Steam Navigation Co. Ltd., [1961] 42 ITR p. 589 four prepositions have been laid down by this Court in this connection and they are as follows: (1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order.
(2) When a question of law is raised before the Tribu nal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order.
(3) When a question is not raised before the Tribunal and the Tribunal deals with it, that will also be a question arising out of its order.
(4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it.
In our view, the present case falls squarely within the fourth category, namely, of cases where a question of law is neither raised before the Tribunal nor considered by it and the aforesaid decision clearly lays down that in such a case, the question would not be a question arising out of the order of the Tribunal notwithstanding that it may arise on the findings given by it.
Mr. Desai sought to rely on the observations in that judgment to the effect that a question of law might be a simple one, having its impact at one point or it may be a complex one, trenching over an area with approaches leading to different points 996 therein and that such a question might involve more than one aspect but that would not, by itself, be sufficient to prevent the party concerned from raising it under Section 66(1) of the said Act.
In our view, these observations are of no relevance in the case before us, as the question sought to be raised by Mr. Desai was neither raised before the Tribunal nor considered by it nor does it arise on the judgment of the Tribunal.
Merely because a question of law might arise on the facts found by the Tribunal this would not render it a question arising out of the decision of the Tribunal.
Moreover, it is interesting to note that in the present case, there is no finding of fact that the Inam was originally given without consideration, although, we agree that it must almost certainly have been so.
However, what the assessee sold was not the agricultural land which was given to the assessee 's ancestor under the Inam but land which was developed as housing sites on which development the assessee had spent considerable amounts of money.
In our view, therefore, it is not open to Mr. Desai to raise this question at all.
The next question which we have to consider is whether the provisions of Section 12 B of the said Act can be brought into play, although, what was transferred was only lease hold interests in the lands in question.
In this connection, it is significant that the leases are for a long period of 99 years and in all the transactions of lease premium has been charged by the assessee for the grant of the lease concerned.
In Traders and Miners Ltd. vs Commissioner of Income Tax, Bihar and Orissa, [1955] 27 ITR p. 341 a case decided by a Division Bench of the Patna High Court, the assessee let on lease for 99 years a portion of a Zamindari acquired by it.
The lease related to the surface right together with nine mica mines located in that area.
The consideration for the lease was the payment of a 'salami ' and a reserve rent per year.
The Income tax Officer determined the cost to the assessee of the mineral rights and after deducting this amount from the salami, he assessed the balance to tax as capital gains under Section 12 B of the said Act.
It was held by the Patna High Court that the gains arising from the said transaction were rightly taxed.
This decision has been cited without comment by Kanga and Palkhivala in their commentary on the Law of Income tax (7th Edition) at page 550 and no contrary case has been cited in the said text book or has been brought to our attention.
It is true that the decision of the Patna High Court relates to a case of mining lease, but to our mind, the principle laid down in that case can well be applied to the case before us.
In the first place, the lease is for a long period, namely, 99 years, hence it would appear held that under the leases in question the assessee has parted with an asset of an enduring nature, namely, the rights to possession 997 and enjoyment to the properties leased for a period of 99 years subject to certain conditions on which the respective leases could be terminated.
A premium has been charged by the assessee in all the leases.
In these circumstances, we fail to see how it could be said that the provisions of Section 12 B of the said Act cannot be brought into play.
The grant of the leases in question, in our view, amounts to a transfer of capital assets as contemplated under Section 12 B of the said Act.
In the result, we find that there is no substance in the appeal and dismiss the same with costs.
S.L. Appeal dismissed.

summary:
This was an appeal on a certificate of fitness granted by the High Court against its judgment on a reference made under Section 66(1) of the Indian Income tax Act ("the said Act").
The appellant/assessee owned some agricultural land, which the assessee developed into building sites.
The assessee leased out the building sites to various parties.
The leases were for 99 years.
The assessee received amounts of 'salami ' or premium for the said leases.
Question arose whether the assessee was liable to pay capital gains tax on the amounts of 'salami ' or premium received.
The assessee contended before the Income tax Officer that no capital gains tax could be levied on the said leases as the land was agricultural and that Section 12 B of the said Act did not come into play as only lease hold rights had been conveyed by the assessee to the lessees under the leases in question.
Both these contentions were rejected by the Income tax Officer, the Appellate Assistant Commissioner and the Income tax Appellate Tribunal.
Arising from the decision of the Tribunal, two questions were referred to the High Court, viz. (1) Whether the land sold by the assessee constituted a capital asset within the meaning of Section 12 B of the said Act or was agricultural land as defined in Section 2(4A) of the Act, and (2) Whether the transaction of lease effected by the assessee amounted to a transfer within the meaning of Section 12 B of the said Act so as to attract liability for capital gains tax.
The High Court answered both the questions in the affirmative and against the assessee.
Leave was granted by the High Court to the assessee to appeal to this Court only in respect of the second question.
990 The appellant assessee had contended that Section 12 B of the said Act could have no application as the land in question was Inam land which must have been granted as a pure gift., to the ancestor of the assessee, and that Section 12 B was applicable only in the case of assets where there was a cost of acquisition.
The respondent had urged that the assessee could not raise this contention as it did not arise out of the decision of the Tribunal and was not reflected in the questions referred by the Tribunal particularly in the question in respect of which the certificate of appeal had been granted.
The Court dismissed the appeal upholding the submissions of the respondent.
It was, ^ HELD:that the question in respect of which certificate of fitness had been granted, clearly related to one controversy, namely, whether the provisions of Section 12 B could be brought into play in this case as the transfer was of lease hold interest in immovable property for 99 years and not an outright sale or transfer of the complete interest of the transferor in the immovable property.
The question as to whether Section 12 B could be brought into play where the property sold had not cost anything to acquire as it was gifted, had not been urged before the income tax authorities, the Tribunal or the High Court and was not covered by the decision of the Tribunal or the High Court.
This case fell within the category of cases where the question of law concerned is neither raised before the Tribunal nor considered by it, and in such a case the question would not be a question arising out of the order of the Tribunal notwithstanding that it may arise on the findings given by it, as held by this Court in Commissioner of Income Tax, Bombay vs Scindia Steam Navigation Co. Ltd., ; Merely because a question of law might arise on the facts found by the Tribunal, this would not render it a question arising out of the decision of the Tribunal.
[995B C,G] As regards the question whether the provisions of Section 12 B could be brought into play, although what was transferred was only lease hold interest in the lands in question, it was significant that the leases were for a long period of 99 years and in all the transactions of lease, premium had been charged by the assessee for the grant of the lease concerned.
Under the leases, the assessee had parted with an asset of an enduring nature, namely, the rights to possession and enjoyment to the properties leased for 99 years subject to certain conditions regarding termination of the leases.
It could not be said that the provisions of Section 12 B of the said Act could not be brought into play.
The grant of the leases amounted to a transfer of capital assets as contemplated under Section 12 B of the said Act.
[996G H;997A B] 991 C.I.T. vs Srinivasa & Setty, ; ; Commissioner of Income Tax, Bombay vs Scindia Steam Navigation Co. Ltd., [1961] 42 ITR p. 589 and Traders and Miners Ltd. vs Commissioner of Income Tax, Bihar and Orissa, , referred to.