1452/69 and for respondent in C. A. No.
C. Manchanda, B. B. Ahuja, S. P. Nayar and R. N. Sach they, for the appellants in C. A. No.
The Examiner of Capital Issues did number agree to that proposal.
The Income tax Officer opined that the market value of the shares and securities sold was much more than Rs.
12,90,829/ Thereafter the Income tax Officer initiated proceedings under s. 34 1 a on May 2, 1949 and companypleted the fresh assessment on January 16, 1956 bringing to charge capital gains determined at Rs.
1502/69 .
1452 of 1969 and the assessee has brought Civil Appeal No.
Appeals by certificate from the judgment and order dated September 13, 1968 of the Calcutta High Court in Income tax Reference No.
19,98,849/ and 99 per cent thereof came to Rs.
Pal, T. A. Ramachandran and D. N. Gupta, for the respondent in C. A. No.
In this new partnership the Company had 99 per cent share in its profits.
The, original assessment of the assessee firm for the assessment year 1947 48 was made on August 28, 1948 on a total income of Rs.
1502 of 1969.
Feb. 28, 1947 is the deed of partnership.
On the other hand it claimed that it incurred certain capital loss.
87,56,200/and 99 per cent thereof would work out to be Rs.
We have earlier numbericed that a substantial number of ordinary as well as the preference shares were transferred to the assessee firm at its face value.
1 The companypany 2 A. C. Gladstone 3 S. Gladstone T. S. Gladstone and 5 Glendy Limited.
145 to Rs.
100/ to the public at a premium of Rs.
1502/69 .
For pronouncing on the questions above formulated, it is necessary to set out the material facts.
Later on after further companyrespondence, the Examiner of Capital Issues permitted the Company to companyvert itself into a Public Company and offer its ordinary shares of the face value of Rs.
1452/69 and the appellant in C. No.
At the instance of the assessee as well as the Commissioner, the Income tax Tribunal B Bench, Calcutta stated a case and submitted as many as five questions to the High Court for obtaining its opinion.
The Judgment of the Court was delivered by HEGDE, J. These are cross appeals by certificate.
As to the sum of Rupees Twenty five lakhs by an allotment to the existing partners or their numberinees of Twenty five thousand Redeemable Cumulative Preference Shares of Rupees One hundred each credited for all purposes as fully paid up.
75,86,960/ .
In 1946 the Company applied to the Examiner of Capital Issues for permission to companyvert itself into a Public Ltd. Company and sell its shares at a premium.
The assessee is a registered firm which was carrying on business mostly as managing agents of number of companypanies.
The assessee appealed to the Appellate Assistant Commissioner.
Admittedly their original companyt on January 1, 1939 was Rs.
1 to 5.
On further appeal by the assessee the Tribunal came to the companyclusion that the capital gains made by the assessee were only ,Rs.
As regards the, goodwill the Income tax Officer valued the same as on January 1, 1939, at Rs.
We are companycerned with the assessment of the assessee firm for the assessment year 1947 48 for which the previous year was the financial year ended on March 31, 1947.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
51 per share.
On the basis of the Income tax Officers companyputation, the capital gains on the sale of the investments were Rs.
As seen earlier this amount was substantially reduced by the Appellate Assistant Commissioner and again by the Tribunal as well as by the High Court.
46,76,784/ .
Some of the questions referred to the High Court have number been passed before this Court.
It answered the first part of the question in the affirmative and in favour of the Revenue and the second part in the negative and against the Revenue.
whether on the facts and in the circumstances of the case any capital gains within the meaning of s. 12 B companyld be said to arise by the transaction involving transfer of investments held by the assessee to the Company and whether on the facts and in the circumstances of the case any capital gains within the meaning of s. 12 B companyld be said to arise by the admission of the Company as a partner in the assessee firm and issue of shares of the Company to the public ?
125/ per share and 25,000/ Redeemable Cumulative Preference Shares of the face value of Rs.
One other document that came into existence on the same Jay viz.
Till the end of February 1947, the firm companysisted of four partners namely 1 A.C. Gladstone 2 S. D. Gladstone 3 T. S. Gladstone and 4 Glendye Limited.,
19,78,861/ .
Section 12 B was incorporated into the Act with effect from April 1, 1947.
The assessee received for goodwill the sum of Rs.
100/ at a premium of Re.
70,9.124/ .
The Income tax Officer estimated the value of 99 per cent of the goodwill at Rs.
14,90,000/ The Company took over 99 per cent of the capital deficiency of the partners amounting to Rs.
each of them having, 30, 39, 30 and 1 shares respectively in the profits of the firm.
That day the assessee firm was reconstituted and a new partnership came into existence.
The remaining four, partners had only 1/4th per cent share each in the profits of the new partnership.
It raised various companytentions before the Appellate Assistant Commissioner.
175/ and its preferential share of the face value of Rs.
101 of 1966.
As regards the 3rd question, the High Court opined that on the facts and in the circumstances of the case, the capital gains should have been companyputed at Rs.
On February 28, 1947, the assessee firm through its partners entered into an agreement for sale of some of the shares and securities hold by it in favour of Gillanders Arbuthnot Co. to be hereinafter referred to as the Company for a sum of Rs.
75 lakhs.
27,04,772/ .
75 lakhs.
1452 1502 of 1969.
The Appellate Assistant Commissioner rejected the companytention of the assessee that the proceedings under S. 34 1 a were number validly initiated.
47,95,728/Hence according to him, the Company secured those shares and securities at below market value.
100/ to the public at a premium number exceeding Rs.
Aggrieved by this decision the Commissioner of Income tax has brought Civil Appeal No.
The shares and securties sold under the document are enumerated at the foot of the document.
Originally the proposal of the Company was to sell its shares of the face value of Rs.
86,67,648/ .
The Income tax Officer further observed that the partners of the assessee firm were the sole partners of the Company and further held that the sale had been effected at a lower price with the object of reducing the liability to capital gains tax.
1,03,16,786/ .
100 each ,it a premium not exceeding Rs.
He came to the companyclusion that there were capital gains but he companyputed the same at Rs.
The new partnership companysisted of five partners viz.
