Anam Venkata Krishna Reddy Vs. Commissioner of Income-tax - Court Judgment

Excerpt:
direct taxation - benefit of section 54 - sections 45, 53, 54 and 260 of income tax act, 1961 - assessee sold his ancestral property and purchased another property in relevant assessment year - claimed exemption in respect of capital gains arising from sale under section 54 - income-tax officer and appellate assistant commissioner rejected plea of assessee - on appeal tribunal observed that requirement of purchasing another property within one year satisfied but assessee being hindu undivided family cannot avail benefit of section 54 - observation of tribunal justified as status of assessee as hindu undivided family never challenged - held, decision of tribunal proper and assessment cannot be permitted to reopen from stage of filing return and change it. head note: income tax assessment--status--change in--return filed in huf status--sought to be changed to individual status for enabling relief under s. 54 held: the assessee should not be allowed to go back and change the very return which he has filed and change the entire basis of the assessment. even before the tribunal, the contention was that the assessee is an huf but the argument was that since the huf consists of only one coparcener and minor daughters, he is entitled to have the advantage of s. 54. in such a situation, it is not open to the court in this reference to permit the assessee to reopen the assessment from the stage of filing of the return and change the entire basis of the proceedings taken till now. income tax act 1961 s.143 words and phrases--`the assessee or a parent of his' in s. 54--significance--is that s. 54 is applicable to individuals only.-shrigopal rameshwardas v. addl. cit (1979) 119 itr 980 (mp), danhyalal and ramswaroop v. cit (1984) 149 itr 157 (mp), smt. rampyaribai narayandas v. cit (1984) 147 itr 223 (mp) and -cit v. c. chandrashkar (1984) 145 itr 429 (kar) relied on. income tax act 1961 s.54 - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - it was pointed out that while the sale deed was executed on december 4, 1975, the assessee purchased another property under the deed dated december 9, 1976, which is clearly beyond one year. on the basis, it was of the opinion that the requirement of purchasing another property within one year was satisfied. ' 4. the words 'the assessee or a parent of his' clearly mean that this section is applicable only to individuals and not to other persons. 5. we are, however, not satisfied that the assessee should be allowed to go back and change the very return which he has filed and change the entire basis of the assessment.b.p. jeevan reddy, j. 1. two questions are referred by the income-tax appellate tribunal to this court under section 256(1) of the income-tax act, which read thus : '1. whether, on the facts and the circumstances of the case, the income-tax appellate tribunal was legally right in permitting the respondent-income-tax officer to raise before it in an appeal filed by the assessee an entirely new plea for the first time to sustain an assessment on the capital gains derived on the sale of the assessee's residential house 2. whether, in any event, and on the facts and in the circumstances of the case, the capital gains derived on the sale of the assessee's residential house is exempt under section 54 of the income-tax act, 1961 ?' 2. the relevant facts are that the assessee is a hindu undivided family. it owned a house at nellore which was an ancestral property, which it sold for a sum of rs. 1,65,000 in the year 1975. in the assessment proceedings for the assessment year 1976-77, the assessee claimed exemption in respect of the capital gains arising from the sale of the above property under section 54 of the income-tax act. it was submitted that the assessee has purchased another property for a sum of rs. 1,10,000 within one year of the sale and, therefore, it is exempted from the capital gains tax under section 54 of the income-tax act. this plea was rejected by the income-tax officer and the appellate assistant commissioner on the ground that the purchase of the property was made beyond one year. it was pointed out that while the sale deed was executed on december 4, 1975, the assessee purchased another property under the deed dated december 9, 1976, which is clearly beyond one year. when the matter came to the tribunal, the tribunal held, following the decisions of the madras and calcutta high courts, that the expression 'within one year' as occurring in section 54 of the act must be construed as within the next calendar year. on the basis, it was of the opinion that the requirement of purchasing another property within one year was satisfied. but yet it dismissed the appeal on the ground that the assessee being a hindu undivided family, it cannot take advantage of section 54 of the act. this argument was urged for the first time by the revenue at the stage of the tribunal only and it was allowed to be raised and upheld. hence, the aforesaid two questions are referred to. 3. so far as the legal proposition that the hindu undivided family is not entitled to have the benefit of section 54 of the act is concerned, it appears to be beyond any doubt. section 54 of the income-tax act reads thus : 'where a capital gain arises from the transfer of a capital asset to which the provisions of section 53 are not applicable, being buildings or lands appurtenant thereto the income of which is chargeable under the head 'income from house property', which in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his mainly for the purposes of his own or the parent's own residence, and the assessee has within a period of one year before or after that date purchased, or has within a period of two years after that date constructed, a house property for the purposes of his own residence, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, - (i) if the amount of the capital gain is greater that the cost of the new asset, the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gains is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be the cost shall be reduced by the amount of the capital gain.' 4. the words 'the assessee or a parent of his' clearly mean that this section is applicable only to individuals and not to other persons. it is also the view taken by the two other high courts, viz., the madhya pradesh high court in shrigopal rameshwardas v. addl. cit : [1979]119itr980(mp) , kanhyalal and ramswaroop v. cit : [1984]149itr157(mp) and smt. rampyaribai narayandas v. cit : [1984]147itr223(mp) and the karnataka high court in cit v. c. chandrashekar : [1984]145itr429(kar) . indeed, this position was not challenged by learned counsel for the assessee. however, learned counsel contended that the assessee should not be allowed to raise the contention that half the interest in the said house is the separate property of the karta of the hindu undivided family in as much it had devolved upon him on the death of his father under section 8 of the hindu succession act. it is pointed out that there was a partition between him and h is father during the lifetime of his father and that in that partition he got half the house and that the other half devolved upon him on the death of his father under section 8 of the hindu succession act. relying upon the decision of the supreme court in cwt v. chander sen : [1986]161itr370(sc) and of the madhya pradesh high court in smt. prabha rajya lakshmi v. wto : [1983]144itr180(mp) , it is contended that the property devolving upon him under section 8 of the hindu succession act is his separate property. it is also submitted that because the legal position w as not clear at the time of filing the return, this distinction was not put forward and the return was filed as hindu undivided family and the matter was proceeded on that basis. 5. we are, however, not satisfied that the assessee should be allowed to go back and change the very return which he has filed and change the entire basis of the assessment. it may be noted that even before the tribunal, the present contention was not urged. even before the tribunal the contention was that the assessee is a hindu undivided family but the argument was that since the hindu undivided family consists of only one coparcener and the other members thereof are only the wife of the karta and two unmarried minor daughters, he is entitled to have the advantage of section 54 of the act. this was not accepted by the tribunal holding that the status of the assessee was never in dispute, viz., hindu undivided family. in such a situation, we do not think it is open to us in this reference to permit the assessee to reopen the assessment from the stage of the filing of the return and change the entire basis of the proceedings taken till now. it can neither be permitted by this court nor can it be done by the tribunal under section 260 of the act. 6. for the above reasons, both the questions referred are answered in the affirmative, i.e., in favour of the revenue and against the assessee. there shall be no order as to costs.