D.L.F. United Ltd. vs Commissioner Of Income-Tax, ...
1986 Latest Caselaw 248 Del

JUDGMENT

S. Ranganathan, J.

1. This is a reference under the Income-tax Act pertaining to M/s. Delhi Land and Finance P. Ltd. in respect of the assessment year 1965-66. Since the above company has subsequently been amalgamated with M/s. DLF United Ltd., it is M/s. DLF United Ltd. that continues these proceedings.

2. The Delhi Land and Finance P. Ltd. was a private limited company which carried on business of colonisers in the Union Territory of Delhi and is hereinafter referred to as "the assessed". The assessed purchased 143 bighas and 10 biswas of land for RS. 87,930.44 and the land was sold through M/s. DLF Housing & Construction P. Ltd. for Rs. 1,19,583.30 resulting in a surplus of Rs. 31,653. This surplus arose in the assessment year 1965-66 for which the relevant previous year was the calendar year 1964.

3. In its return for the assessment year 1965-66, the assessed returned the sum of Rs. 31,653 as its business income. However, it filed an appeal to the Appellate Assistant Commissioner and prayed that the sum of Rs. 31,653 should be excluded from the assessment urging that the transaction was not one in the course of business and that being a transaction of agricultural land, even capital gain was not attracted to the case. The Appellate Assistant Commissioner, however, rejected the contention of the assessed.

4. The assessed preferred an appeal to the Appellate Tribunal referring to the contents of paragraph 2 and paragraph 3 of the Appellate Assistant Commissioner's order and the Tribunal disposed of the contention in the following words :

"Mr. Chadha, appearing on behalf of the appellant company, has conceded that the facts in the relevant assessment year are identical in material particulars with the facts which were before a Special Bench of the Tribunal constituted by the then Vice-President, Shri H. M. Jhala, and two Judicial Members, viz., Shri Dalip Singh and Shri D. R Khanna, in I.T.A. No. 4971 of 1971-72 in respect of 1963-64 assessment year. The main order of the Special Bench was passed by Shri Dalip Singh, Judicial Member, on April 22, 1974, with which the learned Vice-President, Shri Jhala, concurred. Shri D. R. Khanna, Judicial Member, passed a separate but concurrent order on April 24, 1974. As the facts during the relevant accounting year are admittedly similar to the facts discussed by the Special Bench in respect of 1963-64 assessment year, we reject this contention of the assessed for reasons discussed by the Special Bench of the Tribunal, with which we agree."

5. Aggrieved by the order of the Tribunal, the assessed preferred an application under section 256(1) of the Income-tax Act and the Tribunal has referred the following questions of law for the opinion of this court :

"1. Whether. on the facts and in the circumstances of the case, the surplus of Rs. 31,653 realised on sale of land was rightly assessed to tax as assessed's business profit ?

2. Whether, on the facts and in the circumstances of the case, the rejection of the assessed's claim that the surplus of Rs. 31,653 was agricultural income within the meaning of section 2(1)(a) of the Income-tax Act, 1961, and hence exempt from tax, was valid in law ?"

6. In paragraph 3 of the statement of the case, the Tribunal has again observed that in the appeal it had been conceded that the facts for this assessment year on this issue were not materially different from those before the Special Bench of the Tribunal which heard I.T.A. No. 4971 of 1971-72, and that since it was not in dispute that the Special Bench had rejected the assessed's contention for the earlier assessment year, the Tribunal for the present year had also rejected the contention of the assessed, following the order of the Special Bench.

7. On the facts, as mentioned above, the questions of law which have been referred to us for opinion have to be answered in favor of the assessed because we find that the reference made to this court from the order of the Special Bench, referred to earlier, has been answered in favor of the assessed, so far as these questions are concerned. This was in ITR

8. No. 136 of 1976, disposed of by a Bench of this court on August 9, 1984 (infra p. 714). Not only that, we find that, in similar circumstances, references in respect of the assessment years 1961-62 and 1964-65, in regard to the similar surplus, have been answered in favor of the assessed (vide D. L. F. Housing and Construction P. Ltd. v. CIT [1983] 141 ITR 806 (Delhi) and D. L. F. United Ltd. v. CIT [1986] 158 ITR 342 (Delhi). In other words, if it is taken that the facts in relation to the assessment year 1965-66 with which we are now concerned are, in all material particulars, similar to or identical with those that came up for consideration in 1963-64, then the assessed's reference has to succeed in the light of the above decisions.

9. Shri D. K. Jain, learned counsel for the Department, however, contended that the Tribunal's assumption that the facts were not materially different in the two assessment years is incorrect. He pointed out that the surplus that came up for consideration in the assessment years 1961-62, 1963-64 and 1964-65 arose as a result of acquisition of certain lands which had been purchased by the assessed under the Land Acquisition Act. On the other hand, so far as the present assessment year is concerned, he pointed out, the surplus arose as a result of land purchased, plotted into house sites and sold through the medium of another company by the assessed. He submitted that, whatever may be the position in respect of the surplus which arose out of the land acquisition, the position would be totally different in respect of surplus which arises as a result of voluntary acts of purchase and sale indulged in by the assessed. He, therefore, submitted that the question, so far as this year is concerned, has to be decided on materially different facts. He requested that either we should decide on the facts ourselves or remand the matter to the Tribunal or answer the question in such a way as to revive the appeal before it so as to enable the Tribunal to dispose of the appeal on the correct set of facts.

10. Interesting as this argument is, we are afraid we cannot permit the learned counsel for the Department to take up this stand. There is no doubt some substance in his contention that the order of the Appellate Assistant Commissioner, where the facts are set out, indicates that the facts and circumstances of the sale relevant for this year may be somewhat different from the facts and circumstances considered in other years. However, unfortunately for the Department, the proceedings before the Tribunal at the time of the appeal proceeded on the basis of a concession by both parties. At that time, it may be mentioned that the Department had in its favor the earlier Special Bench order of the Tribunal. The assessed, who was the appellant, conceded that the facts were the same but sought to reargue the matter unsuccessfully. The Department did not dispute the correctness of the concession made on behalf of the assessed and was content to have the appeal disposed of on the assumption that the facts were the same as those in the assessment year 1963-64. This is made clear in the appellate order of the Tribunal. Again, at the time of preparation of the draft statement of the case, no attempt was made on behalf of the Department even to mention that the facts and circumstances in this assessment year were different but more in favor of the Department than they were in the earlier years. Here again, the statement that the facts were the same as those in the earlier years has gone unchallenged and the statement has been placed before us as an agreed statement of facts.

11. It is a well-settled proposition that a reference in income-tax matters is on a question of law and that this question of law has to be answered by the High Court on the basis of facts and circumstances either found by the Tribunal or admitted by the parties before the Tribunal. The High Court is bound to confine itself to the facts as found by the Tribunal or as admitted before it. This position has been enunciated in a number of decisions of the Supreme Court of which it is sufficient to refer to the earliest decision in CIT v. Calcutta Agency Ltd. and the more recent decision in CIT v. Panipat Woollen and General Mills Co. Ltd. . In view of these decisions, we cannot, while answering the reference, go behind the statement of facts. Since it was common ground both at the stage of the appeal before the Tribunal as well as at the stage when the case was stated to this court, that the facts for this year are similar to those, in so far as they are material, with those that had been considered in the earlier years, we cannot now hear the Department to contend to the contrary and ask us to decide on different facts or even to direct the Tribunal to examine the facts afresh.

12. It is a pity that the Tribunal at the appropriate stage was not called upon by both the parties to consider the facts of this year independently and that both parties proceeded on the agreed basis that a similar position prevailed as in the earlier assessment year.

13. In the above circumstances and in view of the earlier decisions of this court referred to above, we answer this reference by saying that the sum of Rs. 31,653 was rightly not assessed to tax in the assessment year 1965-66. The reference is disposed of accordingly. There will be no order as to costs.