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Issues Involved:
1. Whether the capital gains relating to the sale of East Kajora Collieries should be assessed in the assessment year 1948-49 or 1949-50. 2. Whether the title to the movable and immovable properties passed on January 1, 1947, or on the date of the actual conveyance on February 25, 1948. Detailed Analysis: Issue 1: Assessment Year for Capital Gains The primary question was whether the capital gains from the sale of East Kajora Collieries should be assessed in the year 1948-49 or 1949-50. The assessee contended that since the sale deed was executed on February 25, 1948, the assessment should be in the year 1949-50. However, the Income-tax Officer included the capital gains in the assessment year 1948-49, citing that possession of the properties was delivered on January 1, 1947, and the assessee did not include the profit from the collieries in his return for that period. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld this view, stating that the capital gains should be included in the assessment year 1948-49 because possession was handed over in January 1947, indicating that the assets had passed to the buyer at that time. Issue 2: Passing of Title to Movable and Immovable Properties Counsel for the assessee argued that the agreement to sell dated April 16, 1947, did not pass any title or interest to any property, and the money received was earnest money, defeasible if the sale was not completed. They further contended that no title passed by mere delivery of possession before the actual conveyance on February 25, 1948. On the other hand, the Commissioner of Income-tax's counsel contended that the title to both movable and immovable properties passed on January 1, 1947, as possession was given on that date, and the parties intended the title to pass then. They emphasized clause 2 of the April 1947 agreement and the recitals in the February 1948 conveyance, which indicated that the vendor shall sell, transfer, assign, and convey the property as and from January 1, 1947. Legal Precedents and Interpretation: The decision in Ramananda Paul v. Pankaj Kumar Ghosh and Mitchell v. Mathura Das were discussed. The former held that the "date of transfer" is when the deed of transfer is registered unless specified otherwise. The latter case discussed the effect of unregistered conveyances confirmed by later bonds. The Supreme Court decision in Commissioner of Income-tax v. Bhurangya Coal Co. was also cited, which held that delivery of possession pursuant to an agreement for sale does not determine that title to immovable property passes thereby. The title to immovable properties passed only when the sale deed was executed. Judgment: The court concluded that the contentions on behalf of the assessee were sound. The agreement of April 1947 did not create any title or interest in land, and the property was not to pass until the consideration money was paid. The moneys received were earnest money. Title to immovable property passed by the sale deed dated February 25, 1948, and title to movable properties also passed on the date of the execution of the agreement. The agreement for sale was subject to acceptance of title, and the price became payable at the time of the execution of the conveyance. Conclusion: The question was answered in the negative, indicating that the capital gains were not chargeable to tax under section 12B in the assessment year 1948-49. The assessee was entitled to costs, and a certificate for two counsels was granted.
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