TaxTMI 
TaxTMI 
1971 (8) TMI 65
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....o assign the licence subject to the previous consent of the Madras Government. The licence was assigned to the assessee. Mangalore, prior to the reorganisation of States in November, 1956, was in the Madras State. The Madras Legislature passed the Madras Electricity Supply Undertakings (Acquisition) Act, 1954. Under the provisions of section 4 of this Act the State Government had the power to take over, by order in writing, any electricity undertaking declaring that it shall vest in the Government on the date therein specified, such date being not earlier than four months from the date of the declaration. The Madras Government has also power to postpone the date of vesting except that the postponed date could not be later than one year from the date originally fixed. In the instant case, the Government of Madras in the exercise of its power under section 4 of the State Act, made an order that the assessee's undertaking should vest in the Government on the 31st December, 1956. By a subsequent order made on June 12, 1956, the State Government declared that the undertaking would vest not on the 31st December, 1956, but on the 15th October, 1956. The, undertaking, therefore, v....
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....Provided that any distribution of capital assets on the total or paittial, partition of a Hindu undivided family or under a deed of gift, bequest or will shall not for the purposes of this section be treated as a sale, exchange, relinquishment or transfer of the capital assets: Provided further that the transfer of a capital asset by a company to a subsidiary company, the whole of the share capital of which is held by the parent company or by the nominees thereof, shall not be treated as a sale, exchange or transfer within the meaning of the section where the subsidiary company is resident in the taxable territories and is registered under the Indian Companies Act, 1956, so however that for the purposes of clause (vi) or clause (vii) of sub-section (2) of section 10, the cost or the written down value, as the case may be, of the transferred capital asset shall be taken to be the same as it would have been if the parent company had continued to hold the capital asset for purposes of its business." In the instant reference, the Income-tax Officer arrived at the capital gains as follows : Compensation Rs. 18,42,312 Less: Value of fixed assets Rs. 6,46,710 --------------....
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....section 12B of the Indian Income-tax Act, 1922, so as to renderable any surplus arising from such acquisition to tax under section 12B of the Act ?" Learned counsel for the assessee has advanced before us more or less the same argument as was advanced before the Tribunal. Mr. Pal for the assessee contends that section 12B imposed tax on capital gains in respect of any profits and gains arising from sale, exchange, relinquishment or transfer of a capital asset effected after 31st March, 1956. The word "transfer" in the section, says Mr. Pal, is, no doubt, of wide import. It means all types of transfer-voluntary and involuntary. But, in the instant case, the word "transfer" is preceded by three other words of considerable significance, namely, "sale", "exchange" and "relinquishment". Learned counsel contends that the word "sale" postulates a voluntary transfer. A compulsory transfer is not a sale within the meaning of the Act. Similarly, "exchange" is an example of a voluntary act and "relinquishment" is also an instance of voluntarily giving up any right or claim. Learned counsel invited us to compare the word "relinquish" with the word "extinguish" and said that the latter wa....
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....operty Act and said that the essential elements of a sale consist of : (1) parties, (2) subject-matter, (3) transfer or conveyance, and (4) price for consideration. In other words, transfer by operation of law is not a sale within the meaning of the Transfer of Property Act. Learned counsel has also placed before us various decisions which have discussed the doctrine of ejusdem generis. These decisions are Queen v. Justices for the West Riding, Attorney-General V. Brown, Russell (Inspector of Taxes) v. Scott, and Goli Eswariah v. Commissioner of Gift-tax. These cases have explained what the doctrine is. These principles are well established and it is unnecessary to reiterate them here. Mr. Pal for the assessee has also advanced an alternative argument. He says, if the word "transfer" is not construed to mean only a voluntary transfer, then it should be read in conjunction with the preceding words, namely, "sale", "exchange" and "relinquishment", and each of these preceding words refers to a bilateral transaction. In every case of "sale" there must be at least two parties. Similarly, in every case of "exchange" or "relinquishment" there must be at least two parties. We are ....
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....ing the liability of a subject to tax, one must have regard to the strict letter of the law and the true legal position arising out of the transaction in question." Their Lordships have referred to the Supreme Court's previous decision in A. V. Fernandez v. State of Kerala, where the following observations were made : "If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come to the conclusion that the appellant was liable to assessment as contended by the sales tax authorities." We should also point out that in James Anderson v. Commissioner of Income-tax, the Supreme Court, at page 131, has stated : "..... the question whether the sale was voluntary or involuntary is not germane to the scheme of sectio....