He further held that since the transfer was a transfer of business as a going companycern, the profit was the capital gain and therefore number liable to tax.
The Income Tax Officer held that the sum of Rs.
The respondent, M s Mugneeram Bangur Co. Land Department Calcutta hereinafter referred to as the vendors were a firm carrying on the business of land development in Calcutta.
Appeal by special leave from the judgment and order dated December 13, 1961 of the Calcutta High Court in Income tax Reference No.
Relying on Doughty v. Commissioner of Taxes, 1 he held that as the transfer is a transfer of all assets of the firm to a companypany the transfer is a capital sales.
34,99,300 for the assets transferred to the companypany.
34,99,300 was paid by allotment of 17,500 Redeemable Preference shares of Rs.
The Appellate Assistant Commissioner, on appeal, held that the said sum of Rs.
The sum of Rs.
34,99,300 was arrived at in the Schedule thus In rupees Laud 12,68,628 7 7 Goodwill .
Together with the goodwill of the said business And all stock in trade, fixtures.
furniture, fittings and all other articles and things belonging to the said business or in any way used in the same including the benefit and advantages of all companytracts.
2.50,000?
2,50,000 the same being taxable under the Indian Income Tax Act?
The relevant facts and circumstances are these.
The Income Tax Officer filed an appeal before the Appellate Tribunal.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
74 of 1956.
2,50,000 0 0 Motor Car Lorries 25,866 8 6 Furniture, Fixture etc 5,244 5 6 Mortgage secured 71,62,367 6 0 Deposits for purchase of land 53,500 0 0 Advance paid to pleaders solicitors, companytractors staff and other outstanding 1,83,622 3 6 Cash in Bank 71,800 1 8 36,21,029 0 9 Less liabilities 1,21,729 0 9 34,99,300 0 0 The companysideration of Rs.
Now it is hereby agreed and declared between the parties as follows The Vendors do hereby agree to sell and the companypany both hereby agree to purchase All That the said business with effect from the eighth day of July One thousand nine hundred and forty eight.
310 of 1964.
2,50,000 was actually charged by the vendors as a lump sum amount of profits on sale of valuable stock in trade and number goodwill as alleged.
different shares in the firm Mugneerarn Bangur Co. were also carrying on business in lands and buildings along with its activities in other businesses.
Mugneeram Bangur Co. was a firm companystituting of several partners and Mugneeram Bangur Co. Land Department was a separate firm companysisting of the same partners with.
however.
100 each, the allotment being to the vendors partners or their numberinees.
V. Viswanatha Sastrt, S. Murthy and B, P. Maheshwari, for the respondent.
Thus the vendors received shares of the face value of Rs.
tools, implements.
The four questions referred to the High Court by the Income Tax Appellate Tribunal are Whether on the facts and circumstances of this case the Income tax Officer, Central Circle XIV, Calcutta, was companypetent to file the appeal before the Tribunal against the order of the Appellate Assistant Commissioner of Income Tax, Range A. Calcutta?
100 each and 17,493 Ordinary shares of Rs.
The relevant paragraphs of the said agreement are as follows And Whereas the Vendors have agreed to sell and the companypany has agreed to purchase all the said business on the basis hereinafter set out.
Whether on the facts and circumstances of this case the sum of Rs.
The Judgment of the Court was delivered by Sikri, J. This is an appeal by special leave directed the judgment of the High Court at Calcutta in a reference under s. 66 of the Income Tax Act.
D. Karkhanis, Gopal Singh and R.N. Sachthey, for the appellant.
2,50,000 represented the surplus on the sale of lands which was the stock in trade of the assessee companypany or was the value of goodwill alleged to have been transferred?
The Company shall undertake and discharge all debts and liabilities of the Vendors including development expenses such as opening out roads, laying out drains and sanitary arrangements providing electricity in the areas and providing a School in Tolly gunge for education of Children for which the Vendors have given an undertaking to the Tollygunge Municipality and also the liability of the Vendors in respect of the deposits made with them by various intending purchasers of lands but excluding the liabilities of the Vendors for Income tax, Super tax or any other tax or duty on income or revenue in respect of the profits of the business.
Whether on the facts and circumstances of this case by the sale of the whole business companycern it companyld be held that there was taxable profit in the sum of Rs.
The purchase price shall be Rupees thirty four lakhs ninty nine thousand and three hundred paid and satisfied by the Company allotting to the Vendors or their numberinees seventeen thousand five hundred Redeemable Preference shares of Rupees one hundred each and seventeen thousand four hundred and ninetythree Ordinary s hares of Rupees one hundred each in the capital of the Company which will be accepted by the Vendors in full satisfaction of the said purchase price.
By an agreement dated July 7, 1948, the partners of the firm agreed to sell all the business of the said firm to the Amalgamated Development Limited, here in after called the vendee, which companypany was promoted by the partners of the firm.
