Law: Income Tax Act, 1961

Section: 45

Income-tax----Capital gains---Long-term capital gains---Time of sale---Intention of parties is crucial---Agreement for sale of machinery after obtaining sanction of Authority as required---Machinery handed over to vendee before obtaining sanction---Consideration fixed after obtaining sanction---Vendor making entries-in accounts only after sanction was obtained---Sale took place after sanction of Authority was obtained---Long-term capital gains accrued---Indian Income Tax Act, 1961, S.45---Sale of Goods Act, 1930, S.19. Section 19 of the Sale of Goods Act, 1930, states that, where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. Therefore, it is quite clear that the crucial test is the intention of the parties regarding passing of the title. If the intention of the parties could be gathered from the circumstances of a case such an intention will have to be given effect to in order to decide as to when the title to the goods passed. The assessee had a printing press used for the publication of a newspaper. The printing press was imported from U.S.S.R. after obtaining appropriate licence from the Controller of Imports and Exports. The bill of lading was dated April 6,1975, and the machine was installed in May, 1975. On April 4, 1978, the assessee entered into an agreement with D to sell some of the machinery and the, said machines were handed over to the buyer on April 6, 1978. However, since these machines were imported, it was necessary to obtain the permission of the Registrar of Newspapers for the sale of the machines, in terms of the Import Control Policy. In the agreement, it was stated that the sale agreement would be subject to the approval of transfer by the Chief Controller of Imports through the sanctioning authority, the Registrar of Newspapers in India. The agreement also stated that the consideration for the transfer would be fixed by mutual agreement which would be settled either by the issue of shares or by payment of cash or cheque or by a mixture of both. The Registrar of Newspapers in India accorded his…

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