1967 (9) TMI 34

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...." Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was correct in holding that no capital gains taxable under the Indian Income-tax Act, 1922, arose to the assessee ? " The assessee was carrying on business of manufacture and sale of packing cases. Pursuant to a sub-contract which he entered into with a firm called Messrs. Moothadath and Sons, he supplied railway sleepers and timber to the firm during the period between 1st April, 1958, and 25th August, 1959. The business resulted in heavy loss which, as computed by the assessee, amounted to Rs. 84,747. This was accepted by the Income-tax Officer subject to some adjustments for inadmissible expenditure and depreciation. The assessee had taken larg....

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....tion 12B of the-Act. Accordingly, the amount of capital gain was fixed at Rs. 53,317 and taxed by the Income-tax Officer by an order dated 30th March, 1961. The assessee filed an appeal from the aforesaid order and contended before the Appellate Assistant Commissioner that the transaction did not involve any sale and that it was only a surrender of the business in settlement of his debts and it did not attract section 12B of the Act. This contention was rejected and the appeal was dismissed. The assessee filed a second appeal before the Appellate Tribunal, repeating the same contention. He also contended before the Appellate Tribunal that the consideration shown in the deed of transfer had nothing to do with the actual price of the asset....

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.... 12B of the Act. The consideration recited in a document is not conclusive and it is open to an assessee to establish that the real consideration is less than what is shown in the document. But, in this case, there is no material on record to show that the amount mentioned in the document as consideration for the transfer is not the fair market value of the property on the date of the said transfer. On the other hand, the whole consideration of Rs. 1,70,797.61 shown in the document has been satisfied to the assessee in the manner stated in the document for liquidating three items of liabilities of the assessee. There is no case that these liabilities were not real. Except for a small sum of Rs. 1,620.76 they were liabilities which the asses....