Delhi High Court

Jagan Nath Syal vs Asstt. Cgt on 27 September, 2001

Equivalent citations: (2001) 73 TTJ Del 513

ORDER

R.M. Mehta, V.P.

This is an application dated 1-4-2001, filed under section 34(1)(e) of the Gift Tax Act, 1958. In continuation another communication dated 6-7-2001 has been filed.

2. In the initial application it has been submitted that the law laid down by the Special Bench is contrary to the decision of the Honble Supreme Court in the case of Stock Exchange, Ahmedabad v. Asstt. CIT wherein their Lordships have held that the right of membership of a stock exchange is a personal privilege granted to a member and it is non-transferable and incapable of alienation by the member or his legal representative or heirs. It is submitted that the Honble Supreme Court reversed the judgment of the Honble Gujarat High Court in the case of Stock Exchange Ahmedabad v. Asstt. CIT , relied upon by the Tribunal.

3. It is submitted that there is a mistake apparent from the record in the order of the Tribunal inasmuch as following the law laid down by the Supreme Court it has to be held that membership of a stock exchange cannot be treated as an asset and therefore, not exigible to gift-tax or wealth-tax.

4. In the second application it is submitted that the finding recorded in para 26 of the order with reference to the judgment of the Honble Supreme Court in Delhi Stock Exchange Association Ltd. v. CIT ( is not appropriate since it dealt with the law up to December, 1973, and not beyond this period and the assessment year under consideration being 1992-93. A reference is also made to the judgment of the Honble Delhi High Court in CIT v. Delhi Stock Exchange Association Ltd. to buttress the same argument. The plea in conclusion is that the finding recorded in para 26 by the Tribunal is incorrect on the face of the record.

5. During the hearing of the miscellaneous application the learned counsel reiterated the submissions made in the two applications and highlighted the following :

(1) There was no difference in the rules of the Delhi Stock Exchange and the Ahmedabad Stock Exchange.

(2) The nature of the "asset" had been decided by the Honble Supreme Court i.e., it was a personal privilege.

(3) The law laid down by the Supreme Court was binding on all Courts and Tribunals.

(4) Even if a long drawn process was involved the jurisdiction under section 254(2) was not shut out.

6. The learned special counsel for the revenue opposing the applications contended that in case the Tribunal had decided the issue only on the basis of the judgment of the Gujarat High Court supra then probably what the learned counsel was contending would be correct but this was not so as its order had proceeded on various other aspects. It was submitted that the rules of the DSE and Ahmedabad Stock Exchange were quite different and that the Honble Supreme Court in (supra) was considering the case of a defaulter where the IT department was trying to attach the card for recovery of the tax dues. According to the learned special counsel one had to distinguish between the case of a person who was dead and one who was alive vis-a-vis membership of a stock exchange, etc. It was submitted that in the case relied upon by the learned counsel i.e. (supra) the court was dealing with the case of a deceased member of the stock exchange whereas in the case of J.N. Syal he had gifted a share of DSE to his son.

7. The further submission was to the effect that Explanation to rule 47 of CPC specifically stated that subsequent decision of a superior court could not be a ground for "review" of a judgment of a lower court and lastly the learned special counsel concluded his arguments relying upon the decision of the Honble Supreme Court in T.S. Balram, ITO v. Volkart Bros & Ors. for the proposition that only mistakes apparent from the record requiring no debate or investigation could be rectified.

8. In reply the learned counsel cited CBDT Circular No. 68 dated 17-11-1971, pointing out that the Board itself had taken the view that a mistake arising as a result of a later decision of the Supreme Court pronouncing the correct legal position would constitute "a mistake apparent from the record". He cited in support of his arguments the judgment of the Honble Supreme Court in the case of Kunhayammed & Ors. v. State of Kerala & Anr. .

9. We have considered the rival submissions and have also minutely perused the order passed by the Special Bench. The decisions cited have also been considered. At the outset, we would like to observe that in the present order we do not propose to go into the question as to what is the effect of a subsequent judgment of the Supreme Court on the decision taken by the Tribunal since on the facts of the present case we propose to deal with the various arguments advanced by the parties on the merits of the petitions but before we do so we have also to categorically observe that a review of an order by the Tribunal is not permitted in law but a mistake apparent from the record is necessarily to be rectified.

10. On the basis of the aforesaid we advert to the facts of the present case. The, decision of the Gujarat High Court in (supra) was referred to by the parties in their respective arguments but the Tribunal nowhere in the operative portion of its order has relied on the said judgment. It may not be out of place to mention that Shri O.S. Bajpai himself relied on the said judgment to some extent and also sought to distinguish it. The following observations of the Tribunal at pp, 9 and 10 of the order are relevant :

"The learned counsel for the assessed wants to get partial support even from the Gujarat High Court decision. Stock Exchange, Ahmedabad v. Asstt. CIT wherein it is held that the membership of stock exchange is a personal right or personal permission granted by the stock exchange. However, so far as the right to nominate is concerned, the learned counsel submitted that the ratio laid down by the Gujarat High Court in that case does not apply as similar right to nominate was not recognised by the DSE by its bye-laws and, therefore, in that aspect of the matter, the ratio of the Gujarat High Court is clearly distinguishable and not applicable.

11. Before us Mr. O.S. Bajpai while arguing the present applications has contended to the contrary since he now pleads that the rules/bye-laws of the DSE and Ahmedabad Stock Exchange are identical. We have to note as a fact that in deciding the point at issue the Special Bench did not compare the rules/bye-laws of the DSE and its Ahmedabad counterpart as it was not called upon to do so. The special counsel for revenue also relied upon the said judgment but the observations of the Tribunal after discussing the same at length were :

"However, in the facts before us we are not concerned with the case of a member who is a defaulter" (p 54 of the Special Bench decision).

12. Shri K. Sampath, learned counsel for some of the intervenors, also sought to distinguish the judgment of the Hon'ble Gujarat High Court in ( (supra) (para 9 of the Special Bench order).

13. Two other cases relied upon on behalf of the assessed were Vinay Bubna v. Stock Exchange, Mumbai (1999) 155 CTR (SC) 519 : (1997) 97 Comp Case 874 (SC) and Official Assignee of Bombay v. K.R.P. Shroff . According to the miscellaneous application these have been relied upon by the Honble Supreme Court in ( (supra) but it is noticed from para 11 of the order of the Tribunal that these are held to be not applicable as follows :

"Therefore, according to the learned standing counsel for the department none of the three cases on which heavy reliance was placed by the assessed come to his rescue or support the propositions sought to be canvassed on his behalf, We agree with the contention of the learned standing counsel that in all these three cases, there is no question of valuation of a running business, as is the case involved in the facts of the appeals before us. We also agree that the judgments are delivered in different contexts. The question whether a person is entitled to become a member also naturally or whether any conditions are to be fulfillled is quite different from the question whether stock exchange/card/membership is an asset or not. In fact this important distinction is to be borne in mind while holding that the cited decisions are distinguishable and do not deal with the real point in controversy. "

14. The Honble Supreme Court in (supra) as per the miscellaneous application has held that the right of membership is merely a personal privilege granted to a member and it is not transferable and incapable of alienation by the member or his legal representative or heirs. The Tribunal in its judgment considered an identical argument advanced by Shri O.S. Bajpai (pare 5, page 12) which was sought to be rebutted by the special counsel on behalf of the revenue by contending that the definition of "asset" was so wide that even a personal privilege/permission granted by the stock exchange to a member to carry on business as stock broker was an "asset" and, therefore, assessable in the hands of the stock broker. At para 26 of its order the Special Bench considered the provisions of section 2(e) of the Wealth Tax Act as also section 47 of the Income Tax Act to decide whether a share in the DSE as also membership of DSE were capital assets. At para 76 the meaning of the term "property" as per Blacks Law Dictionary was also taken into account and in para 31 the Tribunal held that the term "asset" had got a very wide connotation and the decisions of the Hon'ble Supreme Court in G.H. Arif & Ors. v. CWT and Purshottam Amarsay & Anr. v. CWT were followed.

15. In the present miscellaneous application it is nobodys case that these legal propositions or the decisions of the Honble Supreme Court have been overturned by the decision in (supra).

16. It is quite clear from the discussion in the preceding part of the present order that the Special Bench has not based its decision on the judgment of the Honble Gujarat High Court as is contended in the miscellaneous application and numerous other aspects both factual and legal have been considered to come to the conclusion that it did. In this view of the matter we have to hold that vis-a-vis the first application of the assessed there is no mistake much less a mistake apparent from the record in the order of the Tribunal. Whatever is contended by the learned counsel is more or less a subtle attempt to prevail upon the Tribunal to review its order and which by law we are precluded from doing.

17. Taking up the second application dated 6-7-2001, the solitary submission which is made is that the decision of the Hon'ble Supreme Court in the case of Delhi Stock Exchange v. CIT (supra) which has been relied upon in para 26 of the Special Bench order has no application to the assessment year 1992-93 as it was not to apply beyond the, period December, 1973. According to the learned counsel this mistake is also apparent from the record in the light of the judgment of the Honble Delhi High Court in CIT v. Delhi Stock Exchange Association Ltd. (supra). The only other submission in the second application is that the finding of the Tribunal is para 26 of the order about the applicability of the relevant rule of Sch. M read with the relevant section of the Wealth Tax Act, 1957, would not apply. The special counsel on behalf of the revenue opposed the submissions made in the said application.

18. In considering the aforesaid submissions it is noticed that the Special Bench in para 26 of its order considered the judgment of Honble Supreme Court in (supra) and the decision of the Honble Delhi High Court in (supra) came later i.e., after the judgment of the Special Bench. In our opinion, there is no mistake much less a mistake apparent from the record vis-a-vis submissions on behalf of the assessed in the second application since the Tribunal applied the law laid down by the Honble Supreme Court in (supra) which was the decision before it at the time of hearing. Even if on assumption we were to hold that such judgment was not applicable for the assessment year under consideration, it would be very relevant to mention that the decision of the Special Bench has not proceeded only with reference to the said judgment of the Supreme Court and even if the relevant observations in para 26 of the order were to be deleted or modified there would be no change in the ultimate conclusion. In this view of the matter the pleas raised in the second application on behalf of the assessed would stand rejected.

19. Before we part with these applications we would like to observe that in disposing of the same we have not said anything about the view taken by the Honble Supreme Court in (supra) and further, the judgment in (supra) does not advance assesseds case.

20. In the result, the miscellaneous application is rejected.