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TMI Blog1968 (10) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1957, and not either on January 1, 1957, or on June 1, 1957 ? (ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the profits under section 10(2)(vii) from the sale of the movable properties were not assessable in the assessment year 1958-59 ? " The assessee is a private limited company doing business in manufacture and sale of yarn and cloth. It was running a spinning and weaving mill at Quilon. On March 4, 1957, it entered into a contract with one Karimuthu Thyagaraja Chettiar, hereinafter referred to as Chettiar, for sale to him or his nominees for Rs. 23,01,111 its entire business as a going concern. Rs. 1,00,000 was paid in advance on the date of agreement itself. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place only on August 30, 1957. The Income-tax Officer found that the sale of the immovable properties took effect from August 30, 1957, and the movable properties from January 1, 1957. Consequently, he took into account the amount received by the assessee on sale of movables in excess of the written-down value of the same as profit for the accounting year and passed an order of assessment accordingly. That was confirmed in appeal by the Appellate Assistant Commissioner but he was of the view that the sale of the movables took place only on June 1, 1957, the date of the resolution of the shareholders of the assessee-company by which the agreement of March 4, 1957, was ratified. In the further appeal filed by the assessee, the Appellate Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the parties. Unless a different intention is made out, if a contract for sale of movables is made and the seller delivers possession of them to the buyer, the title in them is taken as having passed to the buyer forthwith. These propositions look simple but difficulties arise in their application. Such difficulties frequently arise when the contract for sale is a combined one for both movable and immovable properties. In such a case should it be the rule applicable to movable properties or immovable properties that has to be applied. Undoubtedly, it is the rule applicable to immovable properties that has to prevail. That is because the contract is a combined one and the intention of the parties is not that the title, to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish the case of the revenue. There is nothing in the agreement to show that any of the properties, movable or immovable, of the business was actually delivered over by the assessee to Chettiar either on January 1, 1957, or on March 4, 1957. The provisions of the agreement only show that from January 1, 1957, onwards, as a purely temporary working arrangement, Chettiar was also allowed to take part in the management of the business. That had to be done in the interests of both the parties. That was because, after the decision had been taken to sell the business, the assessee was not likely to take so much interest in the business as it used to do before and to safeguard the interests of Chettiar, who had advanced a portion of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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