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1965 (11) TMI 24 - SC - Income TaxWhether the income made by the Corporation can be assessed under the provisions of section 44D of the Income-tax Act in the hands of the present assessees and, if so, to what extent? Held that:- The words " by means of a transfer of assets " mean nothing more than " as a result or by virtue or in consequence of the transfer ", therefore, reject the first contention of the learned counsel that the expression " by means of a transfer " in section 44D(1) of the Act means a transfer by an assessee and that, as in the instant case the transfer was by the firm, which was a juristic entity separate from the assessees, the income of the Corporation was not assessable to tax in their hands. The second contention that the said sub-section can be invoked only if at the time of the transfer the income from the said assets was liable to tax and that, as in the present case, when the transfer of the assets was effected in 1933, the income therefrom was not chargeable to income-tax, for it was foreign income not remitted to India---the said assets fell outside the ken of the said sub-section also rejected as the sub-section was designedly couched in the widest phraseology to prevent evasion of tax in the manner prescribed thereunder. If it was not so, a person can transfer his assets to another in a year they have not yielded any income at all, reserving indirectly the right to enjoy the income therefrom in future or he may transfer his assets when they are not yielding any income, but which may, under a scheme of future development, yield enormous profits. On the other hand, a bona fide transferor is amply protected by sub-section (3) of section 44D of the Act. As it is recorded in the statement of case that it was conceded before the Tribunal that the assessees had power to enjoy the income of the assets transferred within the meaning of section 44D(1) of the Act. In the circumstances, the High Court rightly held that the assessees had the power to enjoy the income within the meaning of section 44D(1) of the Act. The Tribunal found as a fact on the material placed before it that the transfer was to avoid the liability to taxation ; and that being a finding of fact, the High Court rightly accepted it. The correctness of the said finding of fact cannot be permitted to be canvassed in these appeals. Appeal dismissed.
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