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TMI Blog1986 (5) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,945 shares of Colaba Land Mills Co. Ltd. The said company went into liquidation and the assessee-company received back 100 per cent. of its investments in shares up to the assessment year 1978-79. In the accounting period relevant to the assessment year 1979-80, the official liquidator paid first return of surplus at the rate of Rs. 40 per share, i.e., Rs. 1,98,000, to the assessee-company. On March 9, 1978, the assessee-company invested this amount in purchase of 17,150, units from the Unit Trust of India, Bombay. The surplus of Rs. 1,98,000 received by the assessee was treated by the Income-tax Officer as capital gains in the hands of the assessee-company in view of the provisions contained in section 46(2) of the Act. The Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Tribunal, the petitioner filed a reference application under section 256(1) of the Act praying that statement of case be drawn up and the matter be referred to the High Court on the following questions of law: " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding in law that the assessee was entitled to the benefit of the provisions contained in section 54E of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the order of the Commissioner of Income-tax under section 263 and in holding that the order passed by the Income-tax Officer was not erroneous and prejudicial to the interest of the Revenue ? " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of law arises out of the same. He has contended that when a company goes into voluntary liquidation and the assessee, a shareholder, receives his share in the capital assets, it does not amount to a receipt from the transfer of capital assets within the meaning of section 45 of the Act. However, such a receipt is chargeable to capital gain under section 45 of the Act, in view of the special provisions of section 46(2) of the Act giving rise to an application under section 2(24) of the Act. Shri Surolia, learned counsel for the Revenue, has urged that when the assessee holding certain shares of a company after it goes into voluntary liquidation, receives certain capital in excess over the actual investment, such capital gains do not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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