TMI Blog1971 (8) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 4(1) of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954, took over all the properties of the assessee on October 14, 1956. The assessee did not carry on any business thereafter. At the time the assessee was carrying on the business of distribution of electricity it was working under a licence which the Government of Madras had granted in favour of Messrs. Octavious Steel Company Ltd., dated the 6th May, 1930. The licensee had the right to assign the licence subject to the previous consent of the Madras Government. The licence was assigned to the assessee. Mangalore, prior to the reorganisation of States in November, 1956, was in the Madras State. The Madras Legislature passed the Madras Electricity Supply Undertakings (Acquisition) Act, 1954. Under the provisions of section 4 of this Act the State Government had the power to take over, by order in writing, any electricity undertaking declaring that it shall vest in the Government on the date therein specified, such date being not earlier than four months from the date of the declaration. The Madras Government has also power to postpone the date of vesting except that the postponed date could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood after amendment by the Finance (No. 3) Act, 1956, was as follows : "12B. (1) The tax shall be payable by an assessee under the head 'capital gains' in respect of any profits or gains arising from the sale, exchange, relinquishment or transfer of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be the income of the previous year in which the sale, exchange, relinquishment or transfer took place : Provided that any distribution of capital assets on the total or paittial, partition of a Hindu undivided family or under a deed of gift, bequest or will shall not for the purposes of this section be treated as a sale, exchange, relinquishment or transfer of the capital assets: Provided further that the transfer of a capital asset by a company to a subsidiary company, the whole of the share capital of which is held by the parent company or by the nominees thereof, shall not be treated as a sale, exchange or transfer within the meaning of the section where the subsidiary company is resident in the taxable territories and is registered under the Indian Companies Act, 1956, so however that for the purposes of clause (vi) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer" in section 12B of the Indian Income-tax Act, 1922. The Tribunal has also passed a supplementary order on the quantum of the capital gains. But, in the instant reference, we are not concerned with that problem. The question referred to us in this reference is as follows : "Whether, on the facts and in the circumstances of the case, the acquisition under the Madras Electricity Supply Undertakings (Acquisition) Act, 1954, came within the scope of section 12B of the Indian Income-tax Act, 1922, so as to renderable any surplus arising from such acquisition to tax under section 12B of the Act ?" Learned counsel for the assessee has advanced before us more or less the same argument as was advanced before the Tribunal. Mr. Pal for the assessee contends that section 12B imposed tax on capital gains in respect of any profits and gains arising from sale, exchange, relinquishment or transfer of a capital asset effected after 31st March, 1956. The word "transfer" in the section, says Mr. Pal, is, no doubt, of wide import. It means all types of transfer-voluntary and involuntary. But, in the instant case, the word "transfer" is preceded by three other words of considerable significance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Commissioner of Income-tax. Here, it was held that the ordinary meaning of the word "sale" was a transaction entered into voluntarily between two persons known as the buyer and the seller by which the buyer acquired properties of the seller for an agreed consideration known as a price. There is no dispute as to this proposition at all. Counsel for the assessee also wanted us to look at the definition of sale in section 54 of the Transfer of Property Act and said that the essential elements of a sale consist of : (1) parties, (2) subject-matter, (3) transfer or conveyance, and (4) price for consideration. In other words, transfer by operation of law is not a sale within the meaning of the Transfer of Property Act. Learned counsel has also placed before us various decisions which have discussed the doctrine of ejusdem generis. These decisions are Queen v. Justices for the West Riding, Attorney-General V. Brown, Russell (Inspector of Taxes) v. Scott, and Goli Eswariah v. Commissioner of Gift-tax. These cases have explained what the doctrine is. These principles are well established and it is unnecessary to reiterate them here. Mr. Pal for the assessee has also advanced an alte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... looking to the correspondence in which the transaction is embodied we must be in a position to say that the transaction between the assessee-company and the Dalmia Co. was a transaction of sale or transfer." The Supreme Court has approved of this decision in Commissioner of Income-tax v. Provident Investment Co. Ltd. At page 195, their Lordships of the Supreme Court have observed : " ...in construing fiscal statutes and in determining the liability of a subject to tax, one must have regard to the strict letter of the law and the true legal position arising out of the transaction in question." Their Lordships have referred to the Supreme Court's previous decision in A. V. Fernandez v. State of Kerala, where the following observations were made : "If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. We must of necessity, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to any statute. But counsel for the department in the course of his argument drew our attention to the budget speech of the Finance Minister and the statement of objects and reasons for, inter alia, the deletion of "compulsory acquisition" from the above proviso and we find that the Government's intention was clearly to make capital gains leviable in cases of compulsory acquisitions as well. It is also interesting that in the 1961 Act much simpler provisions have been introduced in section 45. Section 45 says : "Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 53, 54 and 54B be chargeable to income-tax under the head 'capital gains', and shall be deemed to be the income of the previous year in which the transfer took place. In section 2(47) "transfer" in relation to capital asset has been defined. It includes the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law. The legislature, it appears, has tried to be much more explicit in the new Act than it was after the amendment in 1956 of the ol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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