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TMI Blog1986 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of the court was delivered by SABYASACHI MUKHARJI J.- These appeals are by certificates granted by the High Court of Madras under article 133(1) of the Constitution. An identical question of law had been referred in respect of four separate tax cases to the High Court under section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as the " 1922 Act "), at the instance of the assessee. The High Court disposed of these appeals by one 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., M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Rs. 1,00,000. On the same day, the assessee had sold its 499 shares in Pudukkottah Co. P. Ltd. to Padmanabha Co. P. Ltd. at the cost price of Rs. 4,990. The shares in East India Corporation Ltd., Madura Insurance Co. Ltd. and Pudukkottah Co. P. Ltd. were not quoted on stock-market. It was ascertained from the order of the Tribunal that the break-up value on the date of sale of the 800 shares in East India Corporation Ltd. was Rs. 1,72,800 and the 1,000 shares in the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the ground that the shares were held as an investment and not as stock-in-trade of a business and the assessments were modified by excluding therefrom the profits on the sale of these shares included in the assessment. The Income-tax Officer thereafter reopened the assessment under section 34(1)(b) with a view to assess the capital gain arising on the sale of the shares. As there was some argument as to what the Tribunal actually found, it was better to refer to the 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 hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red with in a matter like this. It is well-settled that when a conclusion of a fact-finding body is based on an inference from primary facts, then the findings of fact are not amenable to challenge but the inferences drawn from, the primary facts are open to challenge as a conclusion of law. It is also open to challenge the same on the ground that the conclusion of fact drawn by the Tribunal was not supported by legal evidence or that the impugned conclusion drawn from the fact 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstatement or concealment was on the Revenue. This court observed that the sub-section had no application in the case of an honest and bona fide transaction where the consideration received by the assessee had been correctly declared or disclosed by him. In the instant case, on behalf of the Revenue, it was contended that it was accepted both by the Tribunal and the High Court that the transactions in question were done in order to defeat the claim of the Revenue. The facts 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs from the Tribunal's order was that the real and main object was to safeguard these shares from being taken over by the Government in settlement of tax dues, and also that the buyer and seller were indirectly connected with each other. The first proviso to section 12B(2) of the 1922 Act provides " full value of the consideration for which the sale, exchange, relinquishment or transfer is made" to be taken as the basis for the computation of capital gains. Therefore, unless there 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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