Law: Income Tax Act, 1961

Section: 45

(a) income-tax---Capital gains---Short and long-term capital gains---Difference between sale with condition to repurchase and mortgage by conditional sale--­Mortgage of land by conditional sale dated 23-8-1963---Assessee obtaining possession under Court decree dated 11-4-1970, on 20-9-1972---Parts of land sold on 25-3-1974 and 20-6-1974---Original transaction amounted to mortgage---Interest in land passed only on date of decree---Gains on sale of lands were short-term capital gains---Indian Income Tax Act, 1961, S.45. (b) Income-tax-- ----Capital of revenue expenditure---Tea company acquiring another tea estate---Expenditure on registration of sale-deed---Legal expenses---Capital expenditure ---Indian Income Tax Act, 1961, S.37. (c) Income-tax-- ----Advance tax---Return---Interest---Levy of interest under Ss. 139(8) & 217(1-A)--- Assessee need not be heard before interest is levied---Indian Income Tax Act, 1961 Ss. 139 & 217. Before charging interest in the manner prescribed in sections 139(8) and 217(1-A) of the Income-Tax Act, 1961, it is not obligatory on the part of the Assessing Officer to give opportunity to the assessee of being heard. There is a difference between mortgage by conditional sale and a sale with a condition of repurchase. In the case of mortgage by conditional sale, the mortgage subsists and even after the expiry of the time fixed for repayment, the mortgagor shall have the right to redeem the mortgage. But that is not so in the case of a mortgage with a condition to repurchase. The two things may resemble each other in form but they differ widely in their incidents. If the transaction is not a mortgage the right of repurchase being an option must be exercised according to the strict terms of the power and the time limited for that purpose must be precisely observed. But in the case of mortgage a failure to fulfil the strict terms of the agreement is not immediately followed by forfeiture of the property. The real point of difference between the two kinds of transactions is that in the case of a mortgage by conditional sale, the sale is only ostensible, whereas in the case of an out and out sale, it is real. The ostensible or real…

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