Suhas Chandra Sen, J.
1. The relevant facts are that during the previous year relevant to the said assessment year, the petitioner received a sum of Rs. 21,20,000 from Messrs. Shaw Wallace and Company Limited as compensation on surrender of its monthly tenancy. The said tenancy was the capital asset of the petitioner and no cost of acquisition was incurred for its acquisition. In the assessment proceedings, the Assessing Officer accepted that the said sum could not be assessed to tax since there was no cost of acquisition of the said monthly tenancy.
2. The contention made on behalf of the assessee is that the view of the Assessing Officer is in consonance with the Division Bench decision of this court and other High Courts and the Supreme Court. The decision of the Division Bench of this court is in the case of CIT v. Mangtu Ram Jaipuria : [1991]192ITR533(Cal) . The Commissioner in the notice initiating the proceedings is not disputing this aspect and is accepting the fact that the said sum could not be assessed as there was no cost of acquisition of the monthly tenancy. The Commissioner, however, is seeking to hold that though the said sum was not assessable as capital gains it could be assessed as a casual and non-recurring receipt under Section 10(3) of the Act. For this proposition, he is seeking support from a decision of the Allahabad High Court in the case of CIT v. Gulab Chand : [1991]192ITR495(All) .
3. It is submitted on behalf of the writ petitioner that the proceedings initiated are wholly without jurisdiction and illegal. The proposed action is contrary to the law laid down by this court and the Supreme Court and against the basic principles of the income-tax law. No disputed questions of fact are involved. The issue is one of pure law going to the root of the jurisdiction. The condition precedent for exercise of the power, namely, the order of the Assessing Officer being erroneous and prejudicial to the Revenue does not exist. The alternative remedy is onerous and would cause undue hardship. A wholly unjust and arbitrary demand for huge amount would be raised and no justice can be expected from the Commissioner in the purported proceedings.
4. The only basic and fundamental issue involved is whether a capital receipt which is not assessable as a capital gain can be assessed as a nonrecurring and casual income by reference to Section 10(3) of the Act. The case of the assessee is that the decision of the Allahabad High Court in Gulab Chand's case : [1991]192ITR495(All) is erroneous and contrary to well-settled principles of law.
5. As against this contention of the respondent, the writ petition is not maintainable. The respondents submit that the instant application is not maintainable as it is barred, inter alia, by the availability of alternative remedy. There was no jurisdictional error in issuing the impugned notice under Section 263 of the Income-tax Act. The impugned notice is the last annexure to the petition.
6. Strong reliance has been placed on the case of CIT v. Ramendra Nath Ghosh : [1971]82ITR888(SC) , where the Supreme Court observed (at page 891) : 'The Income-tax Act provides for an appeal against the order under Section 33B. Normally, the assessee should have gone up in appeal against the order under Section 33B. They should not have been allowed to invoke the extraordinary jurisdiction of the High Court. This court has emphasised that aspect in more than one decision. . . . The High Court should not have exercised its discretion in favour of the assessee in view of the adequate alternative remedy they had'.
7. A similar view was taken by the Calcutta High Court in the case of Samnuggar Jute Factory Co. Ltd. v. CIT : [1990]181ITR221(Cal) .
8. Referring to the decision cited on behalf of the petitioners, it has been contended on behalf of the respondents that the above decisions deal with the question whether a lump sum receipt is taxable as capital gains in the event the actual cost of acquisition cannot be ascertained. Thesaid decisions are not an authority for the proposition whether the surrender value of a tenancy right is a casual and non-recurring receipt within the meaning of Section 10(3) of the Income-tax Act, 1961.
9. Dealing with this decision of this court in the case of A. Gasper v. CIT : [1979]117ITR581(Cal) , it was argued that the reference Bench of the Calcutta High Court held that the assessee's monthly tenancy was a capital asset and it had been transferred to a third party with the consent of the landlords and on such transfer his rights stood extinguished. The amounts received by the assessee from the third party was assessable as capital gains under Section 45(1). In appeal, the assessee argued for the first time before the Supreme Court in A. Gasper v. CIT : [1991]192ITR382(SC) , that the monthly lease was not acquired by the assessee at any ascertainable cost and even assuming that it was a capital asset, it was of such a nature that its actual cost of acquisition could not be ascertained. The Supreme Court dismissed the appeal and affirmed the judgment of the Calcutta High Court. The Supreme Court held that the point of cost of acquisition of capital assets was not argued and relied upon the admission of learned counsel in the third paragraph of page 386 of the report.
10. It has been stated by the Commissioner in the notice under Section 263 :
'Your income-tax assessment for the assessment year 1989-90 was completed under Section 143(3)/144A on January 2, 1991, on a total income of Rs. 81,900. Scrutiny of your assessment records reveals that during the relevant previous year you received a sum of Rs. 21,20,000 from one Messrs. Shaw Wallace and Co. as compensation towards surrender of tenancy rights. Income arising out of such surrender was assessable in your hands in the assessment year 1989-90. In this connection, I am to invite your attention to the decision of the Allahabad High Court in the case of CIT v. Gulab Chand : [1991]192ITR495(All) . The High Court has held that money received on surrender of tenancy rights is a receipt of casual and non-recurring nature within the meaning of Section 10(3) of the Income-tax Act, 1961. The Assessing Officer has obviously erred in law in excluding the amount of compensation received by you in the computation of your total income. The assessment is, therefore, erroneous and prejudicial to the interest of the Revenue. I, accordingly, propose to pass an order under Section 263 cancelling the aforesaid assessment and to direct the Assessing Officer to make a fresh assessment.'
11. The main reason for the proposed revision as stated in the notice is that 'the Assessing Officer has obviously erred in law in excluding theamount of compensation received by you in the computation of your total income'. For this conclusion reliance has been placed on the decision of the Allahabad High Court in the case of Gulab Chand : [1991]192ITR495(All) .
12. The advocate on behalf of the assessee has rightly contended that the ratio of the decision of Gulab Chand's case : [1991]192ITR495(All) , cannot be reconciled with the view taken by this court in the case of A, Gasper : [1979]117ITR581(Cal) , which was ultimately affirmed by the Supreme Court. Moreover, the amount received as capital gain cannot be taxed as casual and non-recurring income. The argument on behalf of the Revenue if taken to its logical conclusion would mean that everything that is exempted from the capital gain by the statute will be taxed as a casual and non-recurring receipt.
13. If an assessee sells a house property and utilises the receipt for purchase of another house property, the sale proceeds cannot be treated and taxed as a casual and non-recurring receipt. Capital gains have been specifically dealt with in Sections 45 to 55 of the Income-tax Act. Whether any amount received on transfer of a capital asset is liable to be taxed or not will be decided in accordance with the specific provisions of Sections 45 to 55 of the Income-tax Act. If any amount of capital gain is not taxable as capital gain for any reason, that amount cannot be treated as a casual and non-recurring receipt under Section 10(3) of the Income-tax Act, 1961. Moreover, Section 10(3) provides :
'Incomes not included in total income.--In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-
(1) agricultural income ;
(2) subject to the provisions of Sub-section (2) of Section 64, any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any impartible estate, where such sum has been paid out of the income of the estate belonging to the family ;
(3) any receipts which are of a casual and non-recurring nature, not being winnings from lotteries, to the extent such receipts do not exceed one thousand rupees in the aggregate :
Provided that this clause shall not apply to -
(i) capital gains chargeable under the provisions of Section 45 ; or
(ii) receipts arising from business or the exercise of a profession or occupation ; or
(iii) receipts by way of addition to the remuneration of an employee ;'
14. Proviso (i) to Sub-section (3) of Section 10 clearly recognises that capital gain chargeable under Section 45 will not come within its ambit. Moreover, Section 10 lays down that certain categories of income will not be included in the computation of total income of a person. A casual and non-recurring receipt not exceeding Rs. 1,000 will not be taxed. From these it does not follow that any capital receipt over and above Rs. 1,000 will have to be taxed. If a person receives Rs. 10,000 by way of legacy, the amount cannot be brought to charge on the ground that it is a casual and nonrecurring receipt above Rs. 1,000. Section 10 is not a charging section. It merely specifically excludes certain types of income from the ambit of 'total income' as defined under the Act. The case of the Commissioner as stated in the notice is not to bring the sum of Rs. 21,20,000 to tax as capital gain but to treat it as taxable otherwise on the strength of the aforesaid decision of the Allahabad High Court in the case of Gulab Chand : [1991]192ITR495(All) .
15. In my judgment, the approach of the Commissioner is erroneous in law and the notice under Section 263 must be quashed.
16. The question of alternative remedy in a case like this is meaningless. The Commissioner has given notice to revise this case on the basis of the judgment of the Allahabad High Court in the aforesaid case of Gulab Chand : [1991]192ITR495(All) .
17. A pure question of law has been raised. Any contention before the Commissioner that Gulab Chand's case : [1991]192ITR495(All) was wrongly decided cannot possibly be accepted by the Commissioner. This point can only be decided by this court. Although as a matter of rule, I do not intervene at this stage of issuance of a notice under Section 263, I am of the view that in a case like this there is no adequate alternative remedy for the petitioner.
18. Therefore, in the peculiar facts of this case, this writ petition succeeds. The notice under Section 263 is quashed. If any order has been passed pursuant to the impugned notice, that will also stand quashed.
19. There will be no order as to costs.