TMI Blog1967 (4) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... Lal Mehta has been described as the beneficial owner of the respondent as he had purchased all but five shares of the respondent. On the same date, i.e., April 1, 1946, Giridhari Lal Mehta sold the shares to Jardine Skinner Co. at the rate of Rs. 100 per share. Giridhari Lal Mehta retained the share scrips with blank transfer forms until May, 1946, when the shares were registered in the name of Jardine Skinner Co. In November, 1946, Jardine Henderson Co. Ltd. was incorporated and these 1,500 shares were transferred in March, 1947, by Jardine Skinner Co. to Jardine Henderson Co. Ltd., at Rs. 493-10-0 per share. In assessing the respondent to income-tax for the assessment year 1947-48 the Income-tax Officer held that the respondent had sold the shares at the book value of Rs. 136 per share to Jardine Skinner Co. on April 1, 1946, whereas the market value of the shares on that date was Rs. 620 per share and the difference of Rs. 484 per share on 1,500 shares was capital gain arising from the sale of the shares under section 12B of the Income-tax Act. The Income-tax Officer made the order under the first proviso to section 12B(2) with the previous approval of the Inspecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the affirmative, but Datta J. answered the question in the negative. In view of this difference of opinion the matter was referred to R.S. Bachawat J. who, by his judgment dated March 21, 1963, answered the question in the negative and agreed with the opinion of S. K. Datta J. In view of the opinion of the majority of the judges the Division Bench passed an order on July 15, 1963, answering the question in the negative and in favour of the respondent. Section 12B of the Income-tax Act as it was in force on April 1, 1947, provided as follows : " 12B. Capital gains.--(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 or transfer of a capital asset effected after the 31st day of March, 1946, and before the 1st day of April, 1948, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange or transfer took place :..... (2) The amount of a capital gain shall be computed after making the following deductions from the full value of the consideration for which the sale, exchange or transfer of the capital asset is made, namely :-- (i) expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voidance or reduction of liability of the respondent under section 12B. But it was contended on behalf of the appellants that the expression " full value of the consideration for which the sale, exchange or transfer of the capital asset is made " appearing in section 12B(2) meant the market value of the asset transferred and on this ground the Appellate Tribunal was justified in taking the market value of the shares to be the full value of the consideration. We are unable to accept this contention as correct. It is manifest that the consideration for the transfer of capital asset is what the transferor receives in lieu of the asset he parts with, namely, money or money's worth and, therefore, the very asset transferred or parted-with cannot be the consideration for the transfer. It follows that the expression "full consideration" in the main part of section 12B(2) cannot be construed as having a reference to the market value of the asset transferred but the expression only means the full value of the thing received by the transferor in exchange for the capital asset transferred by him. The consideration for the transfer is the thing received by the transferor in exchange for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that the expression " full value of the consideration " cannot be construed as the market value but as the price bargained for by the parties to the sale. The dictionary meaning of the word " full " is " whole or entire, or complete " (Shorter Oxford English Dictionary). The word " full " has been used in this section in contrast to " a part of the price ". Consequently, the words " full price " mean " the whole price ". Clause (2) of section 12B itself clearly suggests that if no deductions are made as mentioned in sub-clause (ii) thereof, then that amount represents the full value of the consideration or the full price. In other words, when deductions are made as specified in sub-clauses (i) and (ii), then that amount does not represent the full value. The expression " full value " means the whole price without any deduction whatsoever and it cannot refer to the adequacy or inadequacy of the price bargained for. Nor has it any necessary reference to the market value of the capital asset which is the subject-matter of the transfer. The question, therefore, arises in the present case as to what is precisely the finding of fact arrived at by the Tribunal as regards t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot say therefore, that in the circumstances the Income-tax Officer was in any way wrong in determining the full value of the shares. " In paragraph 11, the Appellate Tribunal held that the first proviso to section 12B(2) did not apply to the case and the sale was not effected with the object of avoidance or reduction of the liability of the assessee under that section, and then observed as follows : " But the right of the Income-tax Officer to determine the full value of the assets is always there specially in a case where the assessee refuses to give all the information to the Income-tax Officer and the value of the assets given by him is so suspiciously low. We, therefore, think there is no substance in the points raised by Mr. Issac. " It was contended by Mr. Asoke Sen on behalf of the respondent that there was no express finding of the Appellate Tribunal that the respondent actually sold the shares at the market price of Rs. 620 per share and that the respondent received that market price of the shares as consideration for the transfer. Reference was made to paragraph 7 of the order of the Appellate Tribunal wherein there is an express finding that the shares were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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