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2002 (7) TMI 42 - HC - Income TaxCapital Gains - "1. Whether, Tribunal was correct in holding in law that the assessee was entitled to the benefit of the provisions contained in section 54E of the Income-tax Act, 1961? - 2. Whether, Tribunal was justified in cancelling the order of the Commissioner of Income tax passed under section 263 and in holding that the order passed by the Income-tax Officer was not erroneous and prejudicial to the interests of the Revenue?" - When the intention of the Legislature is that the distribution of the assets or money on liquidation of the company to its shareholders, shall not be treated as transfer and sub-section (2) of section 46 provides that in spite of that the gain has to be taxed under the head of capital gain that is the intention of the Legislature though by creation of fiction of law we have to go by the provisions of law. For the purpose of benefit of section 54E transfer is a condition precedent and when it is not treated as a transfer the assessee is not entitled to the benefit of section 54E, and, therefore, the Commissioner of Income-tax has rightly revised the order of the Income-tax Officer under section 263 of the Act. The Tribunal has committed an error treating the amount so received from the company as transfer under the existing provisions of the Act.- We answer both the questions referred to this court in the negative, i.e., in favour of the Revenue and against the assessee.
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