TaxTMI 
TaxTMI 
1963 (11) TMI 80
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.... It is stated that the object was to grow herbs and plants for medicinal purposes and to construct a warehouse for stocking its goods. The land was, however, compulsorily acquired by the State Government for purposes of the Integral Coach Factory on 7th September, 1957, and the assessee obtained a sum of Rs. 14,580 as compensation. The assessee, therefore, made a profit out of the purchase of this land in a sum of Rs. 12,402. In respect of the accounting year ended 31st of January, 1959, the excess receipt of Rs. 12,402 was shown in Section D of the return with the following description: "Profit in acquisition of land in Mullam village (being agricultural land) by the Government." The assessee claimed exemption from tax on this amount on the ground that section 12B(1) of the Act was not applicable. The Income-tax Officer held that the land was a "capital asset" within the meaning of section 2(4A) of the Act, and that, therefore, section 12B was attracted. The assessee's appeal to the Appellate Assistant Commissioner of Income-tax failed. There was a further appeal ....
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....ion of a brick-kiln. If, at the time of the sale or transfer, which leads to the receipt of money liable to be taxed under section 12B(1), the land is not strictly agricultural in character, then the levy would be proper. In other words, the assessee must show that the land was agricultural even at the time of the sale or transfer. In Mohamed Othuman Sahib v. Commissioner of Income-tax [1957] 31 I.T.R. 480, it was held that, even though the land was once agricultural land, as the assessee did not hold the land for agricultural purposes, and did not derive any agricultural income therefrom, the land was not excluded from the definition of "capital asset" by clause (iii) of section 2(4A), and the profit made in respect of the land was assessable to tax as capital gains under section 12B of the Income-tax Act. On the facts of that case, the Division Bench held that the land was not a land from which agricultural income was derived on the crucial date. We are unable to say that the Division Bench took the view that, unless the assessee were to show actual perception of profits in the year in question, the land could not be treated as agricultural land. We are, however, clear that, on t....
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....the meaning of the section 10(2)(vii) and that therefore the sum of Rs. 3,27,840 was not taxable as profit. The learned judges observed that "sale" was a transaction entered into voluntarily between two persons known as the buyer and the seller by which the buyer acquired the property of the seller for an agreed price. The important point to be noted is that section 10(2)(vii) uses only the word "sale". The second proviso to that provision as it then was reads: "Provided further that where the amount for which any such machinery or plant is sold exceeds the written down value, the excess shall be deemed to be profits of the previous year in which the sale took place." The word "transfer" does not occur in that section. The question is whether the word "transfer" should also be understood and interpreted in the same manner as the Calcutta High Court construed the word "sale". Capital gains were brought to income-tax by the Income-tax and Excess Profits Tax (Amendment) Act, 1947, which enacted section 12B. The section in its present form came upon the statute book, as a res....
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....e of Lords held that the transfer, vesting and compensation did not constitute a sale for the purposes of section 17(1)(a) of the Income Tax Act, 1945. At page 59, Viscount Simonds observed as follows*: "My Lords, in my opinion the company's wagons were not sold, and it would be a grave misuse of language to say that they were sold. To say of a man who has had his property taken from him against his will and been awarded compensation in the settlement of which he has had no voice, to say of such a man that he has sold his property appears to me to be as far from the truth as to say of a man who has been deprived of his property without compensation that he has given it away. Alike in the ordinary use of language and in its legal concept a sale connotes the mutual assent of two parties." If section 12B(1) had only used the expression "sale", we would have held that, under the circumstances of the present case, the assessee, having been deprived of the property not of his own volition but because of compulsory proceedings by way of acquisition, would not come within the mischief....