Log In

| Recover password


The Calcutta High Court in Roma Gupta case @ (2016] 385 ITR 663 (Cal) was confronted with an appeal by a woman who received 50% value realized from sale of immovable property in satisfaction of a Court decree of grant of alimony from her ex-husband. 

She offered such amount as capital gains and further claimed exemption under section 54 of the Income-tax Act, 1961 with respect to such long-term capital gains. 

The AO on examination found that the property solely belonged to her husband and the assessee was only his nominee. In the result the assessee could not get the benefit of cost of acquisition since she did not contribute investment to purchase the matrimonial house. Thus her offering amount as capital gains turned out to be a mistake. 

The Commissioner (A) held in favour but the Tribunal reversed such order. The Tribunal however left a finding that such proceeds received by the assessee is on account of alimony from her former husband. However since the assessee had no alternative claim as a ground in the appeal memorandum for exemption of alimony the Tribunal did not adjudicate on the same.   

Before the High Court three questions were framed on the original subject of capital gains exemption.

The High Court noticing the finding by the Tribunal on the alimony factor framed an additional question using powers to it under the proviso to sub-section (4) of section 260A of the Act for the purpose of determining the real question in controversy between the parties.

“(IV) Whether 50 per cent. of the sale consideration received by the assessee with respect to the matrimonial house situated at 25, Man deville Gardens, Calcutta was taxable in the hands of the assessee despite the fact that the Tribunal arrived at a finding that the said amount was paid on account of alimony ?”  

 The department counsel objected to it by stating that the assessee cannot make out a new case.

 Rejecting such plea the Court held that it was open to the assessee to contend that the alimony receipt was capital in nature and therefore not taxable. She must have been advised to claim benefit on the basis of capital gains. 

When the alternative case, which the assessee could have made, has not only been found against her but has also been put forward as an answer to her claim, it is not improper to grant her the benefit on that basis. The revenue cannot also in that case be heard to contend that it has been taken by surprise.

 Here the Court cited the judgement of the apex court in the case of Firm Sriniwas Ram Kumar v. Mahabir Prasad, AIR 1951 SC 177 to the effect that an alternative claim that was possible in a situation but not made can be advanced or admitted where the respondent neither deny the same nor could be prejudiced by such a claim at all and in such a scenario the matter ought not to be left to a separate suit.

 Also having made the observations “that the Department did not prefer an appeal/cross objection against the finding of the Tribunal that the payment was “on account of alimony”, the Department must be deemed to be satisfied by such finding” almost left no choice for the department to contest the alimony taxation any longer thereafter. 

Taking clue from this decision the Tribunal may admit alternative claim when it encounters situations like these. This very act could have been possible by the Tribunal in the light of power enjoyed by it under rule 11 of the Appellate Tribunal Rules.

This decision from Calcutta High Court sets in motion a new approach to provide legitimate relief on alternative claim that are otherwise not so found in the grounds of appeal in the appeal memorandum either for ignorance of the taxpayer or misrouting by his counsel.

At the end the Court in this case held that the amount received by the assessee on account of alimony was a capital receipt and hence not taxable.

In such alternative claim situations there is no even need to call upon a taxpayer for a revised return. 

Leave a Reply

Your email address will not be published.

error: Do not copy the content of this website.