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TMI Blog1973 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ., 1,000 shares of the face value of Rs. 100. (3) Pandyan Weaving Mills (Private) Ltd., 1800 shares of the face value of Rs. 100. The above three companies went into voluntary liquidation in December, 1959. In the course of the liquidation proceedings, The liquidators made distribution in the relevant year of account and the assessee-company got cash or assets in lieu of cash of the amount of Rs. 4,57,858 Rs. 1,41,739 and Rs. 1,83,175 in respect of Indian Mills Company (Private) Ltd., Harveys (Private) Ltd. and Pandyan Weaving Mills (Private) Ltd., respectively. The revenue took the view that by reason of the distribution of assets of the three private companies under liquidation by the liquidators, there had been a capital gain of Rs. 96,735.85 in respect of Indian Mills Supply Company (Private) Ltd. and Rs. 41,168.88 in respect of Harveys (Private) Ltd. making a total of Rs. 1,37,904.73. Out of that, loss amounting to Rs. 41,960.56 in respect of Pandyan Weaving Mills (Private) Ltd. was deducted, leaving a balance of Rs. 95,944.00. The assessee-company at first showed the sum of Rs. 95,944.00 as capital gains but subsequently it filed a statement showing a loss of Rs. 59,104 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains' in respect of any profits or gains arising from the sale, exchange, relinquishment or transfer, of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, relinquishment or transfer took place : Provided that any distribution of capital assets on the total or partial partition of a Hindu undivided family or under a deed of gift, bequest or will, shall not for the purposes of this section be treated as a sale, exchange, relinquishment or transfer of the capital assets........" Sub-section (2) of section 12B prescribed a statutory formula for purposes of computation of capital gains. Sub-section (3) of section 12B was as under : " Where any capital asset became the property of the assessee by succession, inheritance or devolution or on any distribution of capital assets on the total or partial partition of a Hindu undivided family or on the dissolution of a firm or other association of persons or on the liquidation of a company or under a deed of gift, or transfer on irrevocable trust, its actual cost allowable to him for the purposes of this section shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey representing his share on distribution of the net assets of the company in liquidation, he receives that money in satisfaction of the right which belonged to him by virtue of his holding the shares and not by operation of any transaction which amounts to sale, exchange, relinquishment or transfer. In the circumstances, we find it difficult to hold that the assessee-company is liable to pay tax on capital gains as contemplated by section 12B of the Act in respect of the amount of Rs. 95,944. In the case of Commissioner of Income-tax v. Bankey Lal Vaidya (to which one of us was a party), the respondent who was a karta of a Hindu undivided family, entered into a partnership with D to carry on the business of manufacturing and selling pharmaceutical products and literature relating thereto. On the dissolution of the partnership, its assets, which included goodwill, machinery, furniture, medicines, library and copyright in respect of certain publications, were valued at Rs. 2,50,000. Since most of the assets were incapable of physical division, it was agreed that the assets be taken over by D and the respondent be paid his share of the value of the assets in money and accordingly t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of property for a price, and adjustment of the rights of the partners in a dissolved firm by allotment of its assets is not a transfer nor it is for a price. In that case the assets were distributed among the partners and it was contended that the assets must in law be deemed to be sold to the individual partners in consideration of their respective shares, and the difference between the written down value and the price realised should be included in the total income of the partnership under the second proviso to section 10(2)(vii). This court in this context observed that a partner may in an action for dissolution insist that the assets of the partnership be realised by sale of its assets, but property allotted to a partner in satisfaction of his claim to his share, could not be deemed in law to be sold to him. In Commissioner of Income-tax v. Associated Industrial Development Co. P. Ltd., a Division Bench of the Calcutta High Court held that the amount received by a shareholder on the liquidation of a company was not assessable. to capital gains as there was no sale, exchange, relinquishment or transfer of the capital assets. Similar view has also been taken by the Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttributes of sale, transfer or exchange, because of the omission of a clarification in the first proviso to sub-section (1) of section 12B of the Act, even though such a clarification was there in the third proviso of the section inserted by the earlier Act (Act 22 of 1947). It is well settled that considerations stemming from legislative history must not be allowed to override the plain words of a statute (see Maxwell on the Interpretation of Statutes, twelfth edition, page 65). A proviso cannot be construed as enlarging the scope of an enactment when it can be fairly and properly construed without attributing to it that effect. Further, if the language of the enacting part of the statute is plain and unambiguous and does not contain the provisions which are said to occur in it, one cannot derive those provisions by implication from a proviso (see page 217 of Craies on Statute Law, sixth edition). In the light of what has been discussed above, the difference between the language of the first proviso to section 12B(1), as inserted by Finance (No. 3) Act of 1956, and the third proviso to section 12B(1), as inserted by Act 22 of 1947, cannot be of much material help to the revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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