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TMI Blog1973 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 12B(2) ?" The matter relates to the assessment year 1961-62. The assessee is a public limited company carrying on the business of manufacture and sale of yarn. The assessee held shares in the following companies as under : (1) Indian Mills Supply Company (Private) Ltd., 2,760 shares of the face value of Rs. 100. (2) Harveys (Private) Ltd., 1,000 shares of the face value of Rs. 100. (3) Pandyan Weaving Mills (Private) Ltd., 1800 shares of the face value of Rs. 100. The above three companies went into voluntary liquidation in December, 1959. In the course of the liquidation proceedings, The liquidators made distribution in the relevant year of account and the assessee-company got cash or assets in lieu of cash of the amount of Rs. 4,57,858 Rs. 1,41,739 and Rs. 1,83,175 in respect of Indian Mills Company (Private) Ltd., Harveys (Private) Ltd. and Pandyan Weaving Mills (Private) Ltd., respectively. The revenue took the view that by reason of the distribution of assets of the three private companies under liquidation by the liquidators, there had been a capital gain of Rs. 96,735.85 in respect of Indian Mills Supply Company (Private) Ltd. and Rs. 41,168.88 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Indian Finance Act, 1949, which confined the operation of that section to capital gains arising before April 1, 1948. Capital gains tax was, however, revived with effect from April 1, 1957, by the Finance (No. 3) Act of 1956. Sub-section (1) of section 12B along with its first proviso was as under : " The tax shall be payable by an assessee under the head 'Capital gains' in respect of any profits or gains arising from the sale, exchange, relinquishment or transfer, of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, relinquishment or transfer took place : Provided that any distribution of capital assets on the total or partial 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........" Sub-section (2) of section 12B prescribed a statutory formula for purposes of computation of capital gains. Sub-section (3) of section 12B was as under : " Where any capital asset became the property of the assessee by su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustee for the members when distributing surplus assets in specie in a winding-up, so that 'no beneficial interest passes in the property conveyed or transferred' within the Finance (1909-1910) Act, 1910 section 74(6), and ad valorem stamp duty under that section is not payable on conveyances or transfers of the property to the members. " When a shareholder receives money representing his share on distribution of the net assets of the company in liquidation, he receives that money in satisfaction of the right which belonged to him by virtue of his holding the shares and not by operation of any transaction which amounts to sale, exchange, relinquishment or transfer. In the circumstances, we find it difficult to hold that the assessee-company is liable to pay tax on capital gains as contemplated by section 12B of the Act in respect of the amount of Rs. 95,944. In the case of Commissioner of Income-tax v. Bankey Lal Vaidya (to which one of us was a party), the respondent who was a karta of a Hindu undivided family, entered into a partnership with D to carry on the business of manufacturing and selling pharmaceutical products and literature relating thereto. On the dissolution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch a transaction does not amount to sale, exchange, relinquishment or transfer of the assets. The revenue, in the circumstances, cannot derive much assistance from that case. In the case of Commissioner of Income-tax v. Devas Cine Corporation, this court while dealing with section 10(2)(vii) of the Act, observed that the expression sale in its ordinary meaning is a transfer of property for a price, and adjustment of the rights of the partners in a dissolved firm by allotment of its assets is not a transfer nor it is for a price. In that case the assets were distributed among the partners and it was contended that the assets must in law be deemed to be sold to the individual partners in consideration of their respective shares, and the difference between the written down value and the price realised should be included in the total income of the partnership under the second proviso to section 10(2)(vii). This court in this context observed that a partner may in an action for dissolution insist that the assets of the partnership be realised by sale of its assets, but property allotted to a partner in satisfaction of his claim to his share, could not be deemed in law to be sold to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange for the purpose of sub-section (1) of section 12B of the Act. If the language of sub-section (1) of section 12B of the Act is clear and does not warrant the inference that distribution of assets on liquidation of a company constitutes sale, transfer or exchange, the said transaction of distribution of assets would not, in our opinion, change its character and acquire the attributes of sale, transfer or exchange, because of the omission of a clarification in the first proviso to sub-section (1) of section 12B of the Act, even though such a clarification was there in the third proviso of the section inserted by the earlier Act (Act 22 of 1947). It is well settled that considerations stemming from legislative history must not be allowed to override the plain words of a statute (see Maxwell on the Interpretation of Statutes, twelfth edition, page 65). A proviso cannot be construed as enlarging the scope of an enactment when it can be fairly and properly construed without attributing to it that effect. Further, if the language of the enacting part of the statute is plain and unambiguous and does not contain the provisions which are said to occur in it, one cannot derive those prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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