TMI Blog1963 (11) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... , compulsorily acquired by the State Government for purposes of the Integral Coach Factory on 7th September, 1957, and the assessee obtained a sum of ₹ 14,580 as compensation. The assessee, therefore, made a profit out of the purchase of this land in a sum of ₹ 12,402. In respect of the accounting year ended 31st of January, 1959, the excess receipt of ₹ 12,402 was shown in Section D of the return with the following description: Profit in acquisition of land in Mullam village (being agricultural land) by the Government. The assessee claimed exemption from tax on this amount on the ground that section 12B(1) of the Act was not applicable. The Income-tax Officer held that the land was a capital asset within the meaning of section 2(4A) of the Act, and that, therefore, section 12B was attracted. The assessee's appeal to the Appellate Assistant Commissioner of Income-tax failed. There was a further appeal to the Income-tax Appellate Tribunal, but the Tribunal affirmed the decision of the department. In this reference, two questions arise. The first is, whether the land is a capital asset within the meaning of section 2(4A); the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, the assessee must show that the land was agricultural even at the time of the sale or transfer. In Mohamed Othuman Sahib v. Commissioner of Income-tax [1957] 31 I.T.R. 480, it was held that, even though the land was once agricultural land, as the assessee did not hold the land for agricultural purposes, and did not derive any agricultural income therefrom, the land was not excluded from the definition of capital asset by clause (iii) of section 2(4A), and the profit made in respect of the land was assessable to tax as capital gains under section 12B of the Income-tax Act. On the facts of that case, the Division Bench held that the land was not a land from which agricultural income was derived on the crucial date. We are unable to say that the Division Bench took the view that, unless the assessee were to show actual perception of profits in the year in question, the land could not be treated as agricultural land. We are, however, clear that, on the facts of the present case, the land was purely a vacant site, on which no agricultural operations were ever conducted. In this view of the matter, the land is certainly a capital asset as defined under the Act. The next questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed price. The important point to be noted is that section 10(2)(vii) uses only the word sale . The second proviso to that provision as it then was reads: Provided further that where the amount for which any such machinery or plant is sold exceeds the written down value, the excess shall be deemed to be profits of the previous year in which the sale took place. The word transfer does not occur in that section. The question is whether the word transfer should also be understood and interpreted in the same manner as the Calcutta High Court construed the word sale . Capital gains were brought to income-tax by the Income-tax and Excess Profits Tax (Amendment) Act, 1947, which enacted section 12B. The section in its present form came upon the statute book, as a result of the Finance Act of 1956. The old section 12B, prior to 1956, contained a proviso in these terms: Provided further that any transfer of capital assets by reason of the compulsory acquisition thereof under any law for the time being in force relating to the compulsory acquisition of property for public purposes... shall not, for the purposes of this section, be treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of a man who has been deprived of his property without compensation that he has given it away. Alike in the ordinary use of language and in its legal concept a sale connotes the mutual assent of two parties. If section 12B(1) had only used the expression sale , we would have held that, under the circumstances of the present case, the assessee, having been deprived of the property not of his own volition but because of compulsory proceedings by way of acquisition, would not come within the mischief of section 12B of the Act. This would not militate against the decision of the Supreme Court in James Anderson v. Commissioner of Incometax**. That was a case where an executor of a deceased person, in the course of the administration of his estate, sold certain shares and securities belonging to the deceased, for the purpose of distribution among the legatees. The sale realised more than the cost price and the excess was treated by the department as capital gains under section 12B of the Act. The assessee's contention was that section 12B was not applicable, as capital assets were not sold by the deceased, and that the sale came within the purview of the third proviso to secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
