Law: Income Tax Act, 1961

Section: 45

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 1948-49 - Assessee, who was owner of certain colliery situated on certain leasehold coal lands, negotiated for sale of leasehold right with certain persons on behalf of 'E' Ltd., a company to be formed subsequently - In course of negotiation purchasers paid to assessee certain sum and thereafter a formal agreement was entered into on 16-4-1947 - However sale deed was executed by assessee in favour of purchasers on 25-2-1948 and same was registered on 26-2-1948 - Balance consideration was paid to assessee on 27-2-1948 - In calendar year 1947, relevant assessment year being 1948-49, ITO taking into account recital in deed of registration held that properties were delivered on 1-1-1947 and accordingly capital gains accrued on sale of colliery was brought to tax in assessment year 1948-49 - Whether since agreement of April 1947 showed that property was not to pass until consideration money was paid, it could be concluded that title to immovable property passed by sale deed dated 25-2-1948 - Held, yes - Whether therefore Tribunal was not right in holding that capital gains arising from sale of colliery was chargeable to tax in assessment year 1948-49 - Held, yes FACTS The assessee was owner of certain colliery situated on certain leasehold lands. The assessee negotiated for sale of leasehold right with A, B and C on behalf of 'E' Ltd. which was to be formed subsequently. In course of negotiation the purchasers paid to the assessee certain sum and thereafter a formal agreement was entered on 16-4-1947. By the April 1947, agreement the assessee agreed to convey to the said purchasers all the vendor's right, title and interest in the Collieries together with the leasehold land in the coal lands and premises on terms and conditions mentioned therein. The said terms and conditions, inter alia, were mainly, first, that by mutual consent the 6-12-1946, and 27-12-1946, agreements were cancelled and the sum of Rs. 4,50,000 paid to the vendor under and in pursuance of the December 1946 agreements were to be deemed and…

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