Income-tax---

----Reference---Capital gains---Short-term capital gains---Computation and levy of tax under S.115E---Short-term capital gains whether includible in long-term capital gains---Question of law---Indian Income Tax Act, 1961 Ss.115C, 115E & 256.

The assessee derived income from interest on debentures and. capital gains, both long-term and short-term, on .sale of equity shares of accompany. The computation as well as levy of tax at the rate of 20 percent. under .section I i 5E of the Income Tax Act, 1961, in respect of long-term capital gains was accepted by the .Revenue: in respect of-short-tern capital gains, there was a dispute regarding computation of tax 'The assessee claimed that tax at the rate of 20 percent. was applicable, both for long-term and short-term capital gains, whereas the case of the Revenue was that on short-term capital gains, the normal rate, of tax was applicable. The Tribunal; on consideration of the relevant provisions, of law held that short-term capital gains fell within the, definition of "investment income" under section 115E read with section 115C. On an. application, to direct reference:

Held that there was no direct judgment either of the Supreme Court of India or of the High Court, on the point; involved in this case. The question whether; on the facts and in, the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the short-term capital gains are included in the long-term capital gains in sections 115E and 1150 and that. the shirt-teen capital gains are investment income within, the meaning of'sectiorn.115C, had to referred.

R. P. Sawhney; senior Advocate with S.K. Sharma .for Petitioner.

Hemant Kumar with Rajesh Garg for Respondent.

JUDGMENT

ASHOK BHAN, J The Commissioner of Income-tax, Haryana Rohtak, has filed this petition under section 256(2) of the Income Tax Act, 1961, for issuance of a mandamus directing the Income-tax Appellate Tribunal-Delhi Bench, New Delhi to refer the following question of law to this Court for its opinion;, along with the statement of the case:

"Whether; on. the facts and in the. circumstances of the case, the Income-tax Appellate Tribunal was right. in law in holding that mention of specific words 'long-term capital gains in section,15E would not necessarily imply that short-term capital gains have been excluded from the applicability of such provisions?"

The Assessee derived income from. interest to debentures and capital gains both longterm and short-term; on sale, of equity shares of Oswal Agra Mills Limited. The computation as welt as levy of tax at the rate .of 20 percent. under section 115E in. respect of long-term capital gains was accepted by the Revenue. In respect of short-term, capital gains there is a dispute regarding computation of tax, The .assessee, claimed that tax at, the rate of 20, per cent, was applicable both for long-term and short-term capital gains, whereas the case of. the Revenue was that on short-term capital gains, the normal rate of tax was applicable.

The Tribunal, on a. consideration of the relevant provisions of law; held that short-term, .capital .gains fall within the .definition. of "investment income." under section 115E read with section 115C.

A question of law does arise from the order of the Tribunal. There is no direct judgment either of the Supreme Court of India or of this Court on the point involved in this, case. The, question of law as claimed by the Revenue is not happily worded. After a perusal, of the order of the ''Tribunal, we are of the view that the question of taw .has to be refrained and; accordingly .we direct the Tribunal to refer the following question of law along with the statement of the case for the opinion of this. Court instead of the one claimed .by the Revenue.

Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the short-term capital gains are included in the long-term capital gains in sections: 115E and 115C and that the short-term capital gains is. an investment income within the meaning of section 115C(c)?"

M. B.A.3264/FC Order accordingly.