Sole Trustee Loka Shikshana Turst vs Commissioner Of Income Tax, Mysore on 28 August, 1975
In fact there are at least
three decisions of this Court, one in Sole Trustee Loka
Shikshana Trust v. CIT: [1975]101 ITR 234, the other in
Indian Chamber of Commerce v. CIT: [1975]101 ITR
796 and the third in Additional CIT v. Surat Art Silk
Cloth Manufacturers Association [1980] 121 ITR
1/[1980] 2 Taxman 501, where the speech made by the
Finance Minister while introducing the exclusionary
clause in Section 2 Clause (15) of the Act was relied
upon by the Court for the purpose of ascertaining what
was the reason for introducing that clause. The speech
made by the Finance Minister while moving the
amendment introducing Sub-section (2) clearly states
what were the circumstances in which Sub-section (2)
came to be passed, what was the mischief for which
Section 52 as it then stood did not provide and which
was sought to be remedied by the enactment of Sub-
section (2) and why the enactment of Sub-section (2)
was found necessary. It is apparent from the speech of
the Finance Minister that Sub-section(2) was enacted
for the purpose of reaching those cases where there was
under-statement of consideration in respect of the
transfer or to put it differently, the actual consideration
received for the transfer was 'considerably more' than
that declared or shown by the assessee, but which were
not covered by Sub- section (1) because the transferee
was not directly or indirectly connected with the
assessee. The object and purpose of Sub-section (2), as
explicated from the speech of the Finance Minister, was
not to strike at honest and bonafide transactions where
the consideration for the transfer was correctly
disclosed by the assessee but to bring within the net of
taxation those transactions where the consideration in
respect of the transfer was shown at a lesser figure than
that actually received by the assessee, so that they do
not escape the charge of tax on capital gains by under-
statement of the consideration. This was real object and
purpose of the enactment of Sub-section (2) and the
interpretation of this sub-section must fall in line with
the advancement of that object and purpose. We must
therefore accept as the underlying assumption of Sub-
section (2) that there is under-statement of
consideration in respect of the transfer and Sub-