:1: bgp bgp bgp IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION INCOME INCOME INCOME TAX REFERENCE NO.141 OF 1990 TAX REFERENCE NO.141 OF 1990 TAX REFERENCE NO.141 OF 1990 Santosh S.Sukhrani E/2,Flushal Apartments, 21st Road, Bandra, Mumbai - 400 060. ..Applicant Vs. Commissioner of Income Tax, ..Respondent Mumbai, Ms.Asifa Khan, for the Applicant. None for the Respondent. CORAM CORAM CORAM :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & A.V.NIRGUDE, A.V.NIRGUDE, A.V.NIRGUDE, JJ. JJ. JJ. DATE DATE DATE : 18TH JUNE, 2008 : 18TH JUNE, 2008 : 18TH JUNE, 2008 P.C. P.C. P.C. 1. Heard the learned Counsel for the Applicant. None appeared for the Respondent, though served. 2. The above Reference Application pertains to A.Y.1982-83 and the only one question of law has been referred to this Court, which reads as under: Whether the Tribunal erred in holding that the cost of Gold should be determined as on the date of maturity and not as on the date of redemption while computing capital gains tax liability ? :2: 2. The brief facts are, that the Applicant - Assessee had purchased certain gold bonds between July,1980 and 25th October,1980. The date of maturity of the aforesaid gold bonds was 27th October,1980. However, the Assessee had actually redeemed the aforesaid gold bonds only on 1st December,1980 and 9th December,1980 for 500 gm. and 4050 gm., respectively. 3. The Income Tax Officer, while assessing, relying on the press communique issued by the Finance Ministry dated 22nd September,1980 had calculated the capital gain from the date of maturity and not when the actual these bonds were redeemed. To put in other words, the Income Tax Officer had calculated the capital gains from 27th October,1980 being the date of maturity of gold bonds instead of calculating the same on 1st December,1980 for 500 gm. and on 9th December,1980 for 4050 gm. being the actual date of redemption. Aggrieved thereby the Appellant had moved the Commissioner of Income Tax (Appeals). Even the Commissioner of Income Tax (Appeals) concurred with a view of the Income Tax Officer and disagreed with the contention of the Assessee that the date of redemption is not relevant and it is the only date of maturity, which is to be construed as date of redemption. :3: 4. Aggrieved thereby, the Appellant again had approached the Income Tax Appellate Tribunal. The said Tribunal also by a judgment and order dated 28th November,1988 relied on a judgment of the Tribunal in the case of Executors and Trustees of the Estate of Executors and Trustees of the Estate of Executors and Trustees of the Estate of Late Late Late Shri.S.G.Saraiya Shri.S.G.Saraiya Shri.S.G.Saraiya, which was a case under Wealth Tax and had concurred with the view of the Commissioner of Income Tax (Appeals) and held that the date of calculating the capital gain would be date of maturity and not the date on which they were actually redeemed. Aggrieved thereby, the Appellant had preferred Miscellaneous Application for rectification of the above issue by way of mistake. However, the Tribunal had refused to interfere with the same, and had made a reference to this Court being the aforesaid question of law. 5. Ms.Asifa Khan, the learned Counsel for the Assessee brought to our notice the press communique dated 14th March,1985 issued by the Income Tax Department of the Government of India, which reads as under: For the purpose of computation of capital gains, the cost of acquisition of gold be the market value of the Bonds on the date of redemption. 6. Ms.Khan pointed out that the above communique is explicitly clear that the computation of capital gains should be based on the cost of acquisition of the gold be the market value of the bonds on the date :4: of redemption. The Income Tax Officer, the Assessing Officer and the Commission of Income Tax (Appeals) and the Income Tax Appellate Tribunal all had completely mis-directed themselves and had not adopted a simple literal meaning which is explicitly clear. Ms.Khan pointed out that merely because the Assessee redeemed it after a few months, it does not mean that the capital gains of the Assessee be calculated from the date of maturity. Even otherwise, the press communique issued by the Government of India makes it very explicitly clear that the date of maturity should be the date on which the Bonds were actually redeemed. Ms.Khan also pointed out that the Tribunal had erroneously relied on its own judgment in the case of Executors Executors Executors and Trustees of the Estate of Late and Trustees of the Estate of Late and Trustees of the Estate of Late Shri.S.G.Saraiya Shri.S.G.Saraiya Shri.S.G.Saraiya, which had arose under the Wealth Tax Act and it had not application whatsoever in the present case even otherwise. 7. We are clearly of the view that the above communique issued by the Income Tax Department to the effect that the computation of capital gains while calculating the gold bonds be the value of the gold bonds on the date of actual redemption. It means, the date on which the actual redemption took place. In the instant case, there is no dispute that the redemption had taken place on 1st December,1980 and 9th December,1980 for 500 gm. and 4050 gm. respectively. One can never interpret and the :5: expressions are so very clear to mean the date of maturity. If the Department had to mean that it should be the date of maturity, then nothing prevented the Department from stating that it should be the date of maturity by issuing communique, if the circular very categorically mentions that the date of redemption should be given full effect. 8. Under these facts and circumstances of the case, we are of the view that the Assessing Officer, Commissioner of Income Tax, the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal had committed an error in interpreting the communique issued by the Government of India. Under these facts and circumstances of the case, we answer the question of law in the affirmative in favour of the Assessee and against the Revenue. Accordingly, the Reference Application stands disposed of. (A.V.NIRGUDE,J.) (A.V.NIRGUDE,J.) (A.V.NIRGUDE,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.)