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Commissioner Of Income Tax, Cochin vs Mrs. Grace Collis And Ors on 23 February, 2001 cites

Commissioner Of Income Tax, Bombay vs Rasiklal Maneklal (H.U.F.) & Ors on 29 March, 1989

In Commissioner of Income-tax, Bombay v. Rasiklal Maneklal (HUF), 177 I.T.R. 198, this Court was concerned with a case of acquisition of shares consequent upon a scheme of amalgamation virtually identical to the Scheme before us. At that time capital gains were chargeable to tax by reason of Section 12B of the Income Tax Act, 1922, which stated thus : 12B. Capital gains.- (1) The tax shall be payable by an assessee under the head Capital gains in respect of any profit or gains arising from the sale, exchange, relinquishment or transfer of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, relinquishment or transfer took place.
Supreme Court of India Cites 7 - Cited by 44 - R S Pathak - Full Document

Vania Silk Mills (P) Ltd vs Commissioner Of Income-Tax, Ahmedabad on 14 August, 1991

In this regard, our attention was drawn by learned counsel for the assessees to the decision of a Bench of two learned Judges of this Court in Vania Silk Mills Pvt. Ltd. v. C.I.T. 191 I.T.R. 647. This was a case in which the appellant company carried on the business of manufacture and sale of art-silk cloth. It purchased during the year 1957 machinery and gave it on hire to Jasmine Mills at an annual rent. Jasmine Mills, as bailee of the machinery, insured it against fire along with its own machinery. The insurance policy contained a reinstatement clause requiring the insurer to pay the cost of the machinery as on the date of the fire in case of destruction or loss. A fire did break out in the premises of Jasmine Mills causing extensive damage, inter alia, to the machinery which became useless as a result. On settlement of the insurance claim, Jasmine Mills received an amount from the insurance company. From out of it it paid Rs. 6,32,533 to the appellant on the account of the destruction of the machinery. The Income-tax Officer brought to tax the sum of Rs. 3,50,792, being the difference between the insurance amount received by the appellant for the machinery and the original cost thereof, as a capital gain. The Appellate Tribunal held that the insurance amount was not received by the appellant on the transfer of a capital asset but on account of the damage to its machinery and that Section 45 of the Act was not attracted. On a reference, the High Court reversed the decision of the Tribunal. This Court held in appeal therefrom that when an asset was destroyed, there was no question of transferring it to others. The destruction or loss brought about the destruction of the right of the owner of the asset in it, but it was not on account of a transfer but on account of the disappearance of the asset. The extinguishment of the right in an asset on account of the extinguishment of the asset was not a transfer of the right but its destruction. The destruction of the right on account of the destruction of the asset could not be equated with the extinguishment of the right on accounts of its transfer. Section 45 of the Act was, therefore, not attracted. The fact that while paying for the total loss or damage to the property the insurance company took over such property or whatever was left of it did not change the nature of the insurance claim, which was an indemnity or compensation for the loss. The payment of the insurance claim was not in consideration of the property taken over by the insurance company, for one was not consideration for the other. This Court then, having so very rightly held that Section 45 was not attracted, went on to consider the definition of transfer and it said: It is true that the definition of transfer in section 2(47) of the Act is an inclusive definition and therefore, extends to events and transactions which may not otherwise be transfer according to its ordinary, popular and natural sense. It is this aspect of the definition which has weighed with the High Court and, therefore, the High Court has argued that, if the words extinguishment of any rights therein are substituted for the word transfer in section 45, the claim or compensation received from the insurance company would attract the said section. The High Court has, however, missed the fact that the definition also mentions such transactions as sale, exchange, etc., to which the word transfer would properly apply in its popular and natural import. Since those associated words and expressions imply the existence of the asset and of the transferee, according to the rule of noscitur a sociis, the expression extinguishment of any right therein would take colour from the said associated words and expressions and will have to be restricted to the sense analogous to them. If the Legislature intended to extend the definition to any extinguishment of right, it would not have included the obvious instances of transfer, viz., sale, exchange, etc. Hence, the expression extinguishment of any rights therein will have to be confined to the extinguishment of rights on account of transfer and cannot be extended to mean any extinguishment of right independent of or otherwise than on account of transfer.
Supreme Court of India Cites 8 - Cited by 113 - P B Sawant - Full Document
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