Commissioner Of Income-Tax vs Bhurangya Coal Co. on 23 September, 1958
Even if the agreement was accepted by the company in 1949,
the question still remains whether any sale or transfer of
assets took place before April 1948. Sale or transfer of an
asset could take place, as it did in respect of the site,
even before the agreement was
L/P(N)4SCI-10
574
accepted. The assets comprised of two items of immovable
property, viz., Plant and machinery valued at Rs. 15,989/-
and site and buildings valued at Rs. 1,26,470/-. It is clear
that title to these assets could not pass to the company
till the conveyance was executed and registered. (See
Commissioner of Income Tax v. Bhurangva Coal Co.(1) No such
conveyance was executed before April 1, 1948. It is only on
November 22, 1948, that a sale deed was executed and
registered in respect of the site. Therefore, it is clear
that the title to these assets did not pass to the company
till after April 1, 1948, and consequently nO sale took
place of these assets before April 1, 1948.
Mr. Rajagopala Sastri however urges in the alternative
that even if no sale took place before April 1, 1948, the
assets had been transferred to the company before that date.
He says that 'transfer' is a wide word' and had been used in
s. 12B to cover those cases where rights in assets have been
transferred in such a manner as to give rise to capital
gains. He further urges that in this case possession of the
assets was transferred' to the company on March 17, 1948,
and the assessee could never get back possession of the
immovable assets in view of s. 53A of the Transfer of
Property Act. In none of the cases cited before us has this
point been considered. We are unable to sustain this
contention. Before s. 12B can be attracted, title must pass
to the company by any of the modes mentioned in s. 12B, i.e.
sale, exchange or transfer. It is true that the word
'transfer' is used in addition to the word 'sale' but even
so, in the context transfer must mean effective conveyance
of the capital asset to the transferee. Delivery of
possession of immovable property cannot by itself be treated
as equivalent to conveyance of the immovable property.
The High Court has relied on the entries made in the
account books of the assessee and the company on March 20,
1948, but the date of sale or transfer according to s. 12B
is the date when the sale or transfer takes place, and it
seems to us that the entries in the account books are
irrelevant for the purpose of determining such a date.
Mr. Rajagopala Sastri contends that the assessee should not
be allowed at this stage to draw a distinction between
movable and immovable assets, but in the statement of the
case, which was agreed to by the assessee and' the Revenue,
a distinction is drawn thus: