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TMI Blog1968 (8) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... f Kumar Motor Service. During the assessee's previous year which was the year ending August 16, 1959, the buses had been plied for part of the year but they were sold between August 16, 1958, and January 13, 1959. Two of the buses had been sold for Rs. 78,000 and the other four for Rs. 35,000, the total consideration received being Rs. 1,13,000. The assessee claimed a payment of Rs. 2,000 as brokerage. The Income-tax Officer fixed a sum of Rs. 25,000 as the route value and held this amount to be a capital gain assessable to tax. On the balance of Rs. 86,000 he worked out the profits in the following manner : Sale price of 6 buses Rs. 86,000 Written down value of six buses Rs. 36,712 Rs. 49,288 The Income-tax Officer conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9). The decision of this court in Commissioner of Income-tax v. West Coast Chemicals and Industries Ltd. was also held by the Tribunal to be inapplicable to the facts of the present case. The assessee moved the Tribunal for making a reference to the High Court and the following question was referred : " Whether, on the facts and in the circumstances of the case, the sum of Rs. 49,288 was assessable as profit under the provisions of section 10(2)(vii) ? " Although the Tribunal had given no finding that the whole of the bus service business had been wound up during the relevant period, the High Court proceeded to answer the question on that assumption. It is difficult to see how the High Court was justified in saying that the Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rackets did not exist before the amendment made by Act 67 of 1949 and were inserted by that Act. In Liquidators of Pursa Ltd. v. Commissioner of Income-tax the controversy arose out of the proceedings relating to the assessment of Pursa Limited for the assessment year 1945-46. Attempts had been made from 1942 onwards to sell the entire business of the company but without success. In December, 1943, an agreement was executed whereby the assessee agreed to sell all the lands, buildings, machinery, plant, etc., used in connection with the sugar factory which was being run by the company. On the date of the sale the company possessed sugar stocks valued at Rs. 6 lakhs which the company continued to sell up to June, 1944. The company went into v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded in the first agreement. The department sought to assess the profits derived from the sale of the chemicals and paper as profits from the business. The assessee contended that it was a realisation sale and this amount was not liable to tax. It was held that on the facts of that sale the sale of chemicals and material used in the manufacture of matches was only a winding up sale to close down the business and to realise all the assets. Therefore, the tax liability was not attracted. In Commissioner of Income-tax v. Express Newspapers Ltd., a decision on which the High Court relied a great deal in the present case, the question again arose out of the assessment made before the amendment made in 1949, the accounting year being 1946-47. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable. When the legislature clearly provided that the proviso would apply even if the sale was made after the cessation of the business it is difficult to conceive that it was intended to exclude from the ambit of the proviso realisation sales of the nature contemplated in the previous decisions. of this court. Such a result would be illogical. Even if logic is not necessarily to govern the interpretation of a taxing provision, the rule of reasonable interpretation cannot be ignored. Indeed, this court in a recent judgment in Commissioner of Income-tax v. Ajax Products Ltd. clarified the position about the effect of the amendment made in 1949 in the proviso and reference was made to the three conditions for the applicability of the secon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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