Law:

Section:

I. Section 45 of the Income-tax Act, 1961 [Corresponding to section 12B of the Indian Income-tax Act, 1922] - Capital gains - Chargeable as - Assessment year 1961-62 - Assessee was a shareholder of company and had been receiving dividend - Subsequently, company went into liquidation and official liquidator informed that there was no possibility of shareholders being paid any portion of their capital investment - Assessee, thus, submitted a return in which he claimed cost of investment in shares as capital loss - Whether there must be a sale, exchange, relinquishment or transfer of capital asset by assessee before he could claim capital loss under transaction - Held, yes - Whether in case of voluntary liquidation property of company does not vest in liquidator and therefore, no relinquishment will arise - Held, yes - Whether, therefore, when official liquidator informed assessee that assets of company might not even be sufficient to pay off creditors, it could not be said that there was relinquishment of any of right of assessee in shares - Held, yes - Whether, consequently, assessee's claim was to be rejected - Held, yes II. Section 45 of the Income-tax Act, 1961 [Corresponding to section 12B of the Indian Income-tax Act, 1922] - Capital gains - Chargeable as - Assessment year 1961-62 - Assessee advanced certain amount to one 'M' - Subsequently, he filed a suit for recovery of advance and obtained a decree - He could, however, realise only a part of amount advanced during assessment year in question - He, thus, claimed amount outstanding under decree as loss allowable under section 12B of 1922 Act - Whether unilateral act of writing off amount in assessee's book would not amount to relinquishment of debt itself - Held, yes - Whether, therefore, amount written off was not entitled to be set off against assessee's other capital gains - Held, yes FACTS The assessee purchased in 1948 50 cumulative preference shares in a company at a cost of Rs. 5,000. He was receiving dividend from the said company up to the accounting year relevant for the assessment year 1952-53. In 1956 the company went into liquidation. On 8-12-1960, the official liquidator informed the…

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