TaxTMI 
TaxTMI 
TaxTMI 
1986 (3) TMI 2
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....common judgment. The High Court had to answer the following question: " Whether, on the facts and in the circumstances of the case, the conclusion of the Tribunal, that for the purpose of the computation of capital gain on the sale of the shares in East India Corporation Ltd., Madura Insurance Co. Ltd. and Pudukkottah Co. P. Ltd., the first proviso to sub-section (2) of section 12B of the Indian Income-tax Act, 1922, was applicable, is correct in law? " The High Court answered the question in the negative and in favour of the assessee. According to the High Court, in the instant case, the shares held by the assessee-company were sold to two persons who were directly or indirectly connected with it at prices considerably less than their ....
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....e Madura Insurance Co. Ltd. was Rs. 1,54,000. Deducting the cost price of Rs. 81,201 and Rs. 1,00,000, respectively, from, the above said break-up value, a sum of Rs. 91,599 and Rs. 54,000, respectively, had been determined as the capital gain under the first proviso to section 12B(2) of the 1922 Act in respect of the sale of shares in East India Corporation Ltd. and Madura Insurance Co. Ltd. The Tribunal gave a finding that there was no capital gain in respect of the sale of the shares in Pudukkottah Co. P. Ltd. Discussing the facts of Tax Case No. 79 of 1966 in the case of Sivakami Co. P. Ltd., the Tribunal held that the assessee was liable to pay capital gains tax under the first proviso to section 12B(2) of the 1922 Act and it also hel....
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....order of the Tribunal. The Tribunal, inter alia, observed as follows : "Assuming that the sale on March 14, 1957, was actuated by the sole motive of sequestering the shares from the Department, it is not necessary that some of the shares which are very valuable should have been transferred at a loss. It falls flat and unconvincing to be told that the sole object was to sequester the shares from the clutches of the Government and at the same time proclaim that the motive was not avoidance of capital gains tax. The assessee's learned counsel was not able to tell us how exactly the sale value of the East India Corporation Ltd. came to be fixed at Rs. 60,000. We find that in another case, the shares in this company had also been valued at the....
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....ct was not rationally possible. In such a case, it is necessary to examine the correctness of the conclusion. Reliance may be placed on the decision of this court in CIT v. Rajasthan Mines [1970] 78 ITR 45. This position is well-settled by many decisions of this court. It may be mentioned that section 52 of the Income-tax Act, 1961 (hereinafter referred to as " the 1961 Act "), corresponds to the first proviso of section 12B(2) of the 1922 Act. The first proviso to section 12B(2) reads as follows: " Provided that where a person who acquires a capital asset from the assessee, whether by sale, exchange, relinquishment or transfer, is a person with whom the assessee is directly or indirectly connected, and the Incometax Officer has reason to....
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....found were that there was a sale. The High Court has stated that the Tribunal had found that the consideration was not understated (emphasis supplied). Counsel for the Revenue contended that this was not correct. On the other hand, an inference could be drawn that the consideration was understated. The High Court also noted that the explanation given by the assessee for effecting the sale was not acceptable. As it appears from the decision of this court in K. P. Varghese's case [1981] 131 ITR 597, the onus was on the Revenue to prove that there was understatement in the document, not that the goods were sold at undervalue. Understatement of a value is a misstatement of value. Selling goods at an undervalue to defeat the Revenue is differen....
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....e is evidence that more than what was stated was received, no higher price can be taken to be the basis for the computation of capital gains. The onus is on the Revenue- the inferences might be drawn in certain cases but to come to a conclusion that a particular higher amount was, in fact, received must be based on such material from which such an irresistible conclusion follows. In the instant case, no such attempt was made. As this court has explained in K. P. Varghese's case [1981] 131 ITR 597, the second ingredient, that is to say, the word " declared " in subsection (2) of section 52 of the Act is very eloquent and revealing. It clearly indicated that the focus of sub-section (2) was on the consideration declared or disclosed by the a....