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TMI Blog1986 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... that amount as arrears of land revenue, the Collector of Deoria attached the assessee's mills and put them to auction sale on November 10, 1955. The land, building, machinery and parking grounds were sold for Rs. 24,00,000 while the movable properties including mill stores, spare parts, tools and equipment were sold for Rs. 1,80,000. All the properties were purchased by the Kanpur Sugar Works (P.) Ltd. Although the sale was held on November 10, 1955, the sale certificate under rule 285M of the U.P. Zamindari Abolition and Land Reforms Rules, 1952, could not be issued till July 4, 1956, on account of objections raised by the assessee, in spite of the fact that the entire amount of purchase money of Rs. 25,80,000 had been paid by the purchasers on December 8, 1955. During the period in which the objections were pending, i.e., November 10, 1955, to July 2, 1956, the Government of India appointed an authorised controller to run the sugar mills by a notification dated November 25, 1955. After possession of the mills was given to the purchasers, a suit was filed by them against the assessee claiming damages for loss of profits on account of the possession of the mills not having been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68, agreed with the Income-tax Officer that the sale attracted clause (vii) of sub-section (2) of section 10, that it took place on July 4, 1956, and that the assessee was, therefore, liable to capital gains under section 12B. But contrary to the view taken by the Income-tax Officer, the Appellate Assistant Commissioner held that the assessee was entitled to substitute the market value of the machinery as on January 1, 1954, in place of its cost price under clause (iii) of section 12B, and accordingly reduced the capital gains from Rs. 10,23,210 to Rs. 4,89,343. Both the Revenue and the assessee filed appeals before the Income-tax Appellate Tribunal. Before the Appellate Tribunal, it was the case of the assessee that while an auction sale may be a sale within the meaning of section 12B, it was not a sale as contemplated under clause (vii) of subsection (2) of section 10. It was urged that a compulsory sale was not sale for the purposes of clause (vii) of sub-section (2) of section 10. It was also urged that as the auction sale bad taken place prior to March 31, 1956, the assessee was not liable to tax on capital gains at all. The Appellate Tribunal by its order dated January 31, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar in which the sale took place:..." The argument for the assessee is that the word " sold " in the clause refers to a sale transaction effected on the free volition of the seller and not where it is in the nature of a compulsory transfer for recovering an arrear of land revenue. Reliance is placed on Calcutta Electric Supply Corporation Ltd. v. CIT [1951] 19 ITR 406, where the Calcutta High Court laid down that the word " sale " in its ordinary meaning, was a transaction entered into voluntarily between two persons, the buyer and the seller, and that, therefore, the requisition of an electricity generating plant by the Government under sub-rule (1) of rule 83 of the Defence of India Rules, not being a voluntary sale, did not fall within the mischief of clause (vii) of sub-section (2) of section 10. Our attention has also been drawn to Indian Steel & Wire Products Ltd. v. State of Madras [1968] 1 SCR 479; AIR 1968 SC 478; [1968] 21 STC 138 (SC). In that case, this court was called upon to consider whether the supplies by the appellant of certain steel products to various persons in the State of Madras under the Iron and Steel (Control of Production and Distribution) Order, 1941, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties were auctioned or on the date when the sale certificate was issued. The recovery of an arrear of land revenue in Uttar Pradesh is governed by the provisions of the U.P. Zamindari Abolition and Land Reforms Act and the Rules made thereunder. We have been taken through the pertinent provisions of that Act and its Rules. The High Court, in the judgment under appeal, has made detailed reference to them and, in an admirable exposition of the law, has demonstrated that the date on which the sale certificate was issued is the date on which the sale must be regarded as having taken place. We have no hesitation in endorsing that view. Section 279 of the U.P. Zamindari Abolition and Land Reforms Act specifies the modes for the recovery of an arrear of land revenue and section 282 prescribes the procedure for the attachment and sale of movable property. Section 286 empowers the Collector to proceed against other immovable property belonging to the defaulter. Rule 281 authorises the Collector to sell immovable property and upon the property being auctioned under the Rules and the objections, if any, thereto having been considered and disposed of, provides for confirmation of the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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