9911796707
TMI Blog2002 (7) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, the Tribunal was justified in cancelling the order of the Commissioner of Income tax passed under section 263 and in holding that the order passed by the Income-tax Officer was not erroneous and prejudicial to the interests of the Revenue?" The relevant facts of the case are that the assessee-company held 4,945 shares of Colaba Land and Mills Co. Ltd., since 1954. The company, Colaba Land and Mills Co. Ltd., went into liquidation and the assessee-company realised the face value of the shares in the assessment year 1978-79 and during the accounting year relevant to the assessment year under reference the official liquidator paid the assessee-company a sum of Rs. 1,98,000 representing the share of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision in the Act, i.e., section 46(1) which provides that the distribution of assets on liquidation of the company to its share holders is not a transfer. Section 46(2) provides that if there is any gain out of the distribution of the assets or money by the company in liquidation that gain shall be taxed under the head of "Capital gains". Learned counsel placed reliance on the decision of the apex court in the case of Vijay Kumar Budhia v. CIT [1993] 204 ITR 355. On the other hand, Mr. Kasliwal, learned counsel for the assessee-company, submits that when the assessee has received the amount against the shares of the company on its liquidation and if there is any gain under section 46(2) of the Act, i.e., taxable under the head of "Capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer. Sub-section (2) of section 46 provides that where the shareholder on liquidation of the company receives any money or other assets, he shall be chargeable to income-tax under the head of "Capital gains" and, therefore, that makes it clear that it is not treated as a transfer under sub-section (1) of section 46 of the Act of 1961 but at the same time the intention of the Legislature is that if the assessee has gained anything out of the assets and money received from the company on liquidation, that can be taxed as a capital gains. Mr. Kasliwal, also brought to our notice a decision of the Gujarat High Court in the case of CIT v. Jaykrishna Harivallabhdas [1998] 231 ITR 108, wherein the provisions of section 46(1) and (2) are conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins, subject of course to certain specified deduction. May be, it is a case of fiction created by Parliament--may be not. The validity of the provision is not questioned nor is it in issue herein. The sub-section says that where a shareholder receives certain amounts or other assets from the company on its liquidation, he shall be charged to income-tax under the head 'Capital gains' in respect of the money so received or on the market value of the assets received as on the date of the distribution." When the intention of the Legislature is that the distribution of the assets or money on liquidation of the company to its shareholders, shall not be treated as transfer and sub-section (2) of section 46 provides that in spite of that the gain ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
