TMI Blog1965 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise transferred" in the latter part of section 10(2)(vib). Appeal dismissed. - - - - - Dated:- 6-10-1965 - Judge(s) : P. B. GAJENDRAGADKAR., K. N. WANCHOO., M. HIDAYATULLAH., J. C. SHAH., S. M. SIKRI JUDGMENT The judgment of the court was delivered by SIKRI J.---This is an appeal by certificate of the High Court of Andhra Pradesh against its judgment dismissing a petition filed under article 226 of the Constitution by the appellant. The appellant is a private limited company, hereinafter referred to as " the company ", and three persons hold shares of the company as under : Shares Amount Rs. Sri C. P. Sarathy Mudaliar 2,797 27,970 Sri C. P. Singaram 420 4,200 Sri C. P. Doraiswamy 500 5,000 The comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt on February 19, 1962, praying inter alia that the Income-tax Officer be prohibited from proceeding with the rectification of the income-tax assessment for 1959-60, as per the memorandum dated February 7, 1962. Two points were taken in the petition : First, that section 10(2)(vib) of the Income-tax Act was repugnant to article 14 of the Constitution; and, secondly, that assuming that section 10(2) (vib) was intra vires, this transaction did not amount to a sale or transfer. The High Court held that section 10(2)(vib) was not repugnant to article 14 of the Constitution, and that the transaction amounted to transfer within section 10(2)(vib). The learned counsel for the appellant, Mr. Naunit Lal, has reiterated the same points before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ship, machinery or plant is sold or otherwise transferred by the assessee to any person other than the Government ; or ......... the development rebate originally allowed shall be deemed to have been wrongly allowed, and the Income-tax Officer may, notwithstanding anything contained in this Act, proceed to re-compute the total income of the assessee for the relevant year as if the re-computation is a rectification of a mistake apparent from the record within the meaning of this section, and the provisions of sub-section (1) shall apply accordingly, the period of four years specified therein being reckoned from the end of the year in which the transfer takes place or the money is so utilised." There is no doubt that on the true in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling to the Government and keeping the rebate with himself. The discrimination, if any, arises on the choice made by the assessee. The legislature perhaps presumes that if the machinery is offered to the Government for sale, the Government will only buy it at a price which will take into consideration the rebate taken by the assessee. In our opinion, therefore, it has not been established that section 10(2)(vib) violates article 14 of the Constitution. Mr. Naunit Lal then urges that in this case there has been no sale or transfer within section 10(2)(vib). He says that the company consisted of the same three persons as the partnership firm. He further says that it is not a commercial transaction at all and what the latter part of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se as a businessman when he transferred these shares to the private limited company. In our opinion, this case has no relevance to the question of the interpretation of the words "sold or otherwise transferred" in the latter part of section 10(2)(vib). The second case, Rogers Co. v. Commissioner of Income-tax , is on the same lines. The Calcutta High Court in Commissioner of Income-tax v. Mugneeram Bangur followed Doughty's case, but there too they were not concerned with the interpretation of the words "sold or otherwise transferred". If we look at the resolution dated June 30,1959, it is quite clear that it is a sale for consideration of a number of buses by the limited company to the partnership. It would be a sale under the Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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