Capital gain requires transfer of a capital asset; tribunal cannot tax a receipt on a new unappealed basis.

A capital gain requires a transfer, sale or exchange of a capital asset; a mere transfer of management of coal mines to another concern was not such a transfer, so the disputed receipt could not be taxed as capital gain. The text also notes that an appellate tribunal is confined to the subject-matter of the appeal as raised by the parties and cannot, on its own motion, treat the same receipt as income on a new basis that was neither appealed against nor cross-objected to. The reference was answered against the revenue.

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Issues: (i) Whether the transfer of management of the coal mines in return for the disputed amount gave rise to a capital gain. (ii) Whether the Tribunal had jurisdiction to treat the disputed amount as income when that point was not the subject of appeal or objection.

Issue (i): Whether the transfer of management of the coal mines in return for the disputed amount gave rise to a capital gain.

Analysis: A capital gain presupposes a transfer, sale, or exchange of a capital asset. The transaction in question was only a transfer of management of the undertaking to another concern, and not a transfer of the capital asset itself. On that footing, the receipt could not be brought within the concept of capital gain.

Conclusion: The receipt did not amount to capital gain.

Issue (ii): Whether the Tribunal had jurisdiction to treat the disputed amount as income when that point was not the subject of appeal or objection.

Analysis: The Tribunal's power is confined to the subject-matter of the appeal, as constituted by the grounds raised by the appellant. It cannot enlarge that subject-matter on its own motion and determine an independent basis of taxation that was neither appealed against nor cross-objected to.

Conclusion: The Tribunal had no jurisdiction to assess the disputed amount as income.

Final Conclusion: The reference was answered against the revenue and the assessee succeeded on the substantial questions decided.

Ratio Decidendi: An appellate tribunal cannot travel beyond the grounds of appeal before it, and a receipt cannot be treated as taxable income on a new footing introduced by the tribunal itself.

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