Law: Income Tax Act, 1961

Section: 256

Income-tax---Income---Accrual of income---Transfer of actionable claim---Assignment complete when document is signed---Winding up of company---Fixed deposits of company in Bank---Fixed deposit receipts handed over to shareholders and intimation furnished to Bank---Interest on fixed deposits not assessable in hands of company. In the case of an actionable claim, section 130 of the Transfer of Property Act, 1882, clearly lays down that no particular form of writing is required for an assignment and that the assignment becomes effective as soon as the document is signed. The effect of the proviso is that till the debtor has notice of such an assignment, any dealing between him and the assignor will be valid as against the transferor. The assessee-company had been carrying on fishery business. In order to obtain the benefits of section 54E of the Income-tax Act, 1961, it had made a fixed deposit with the United Bank of India for 61 months. Subsequently, these deposits were reinvested in 84 term deposits of Rs.5,000 each. In January, 1978, the company was wound up and a liquidator was appointed. The liquidator distributed 38 term deposits amounting to Rs.1,90,000 on March 11, 1978, and credited 27 term deposits amounting to Rs.1,35,000 to the accounts of the respective shareholders. The Income-tax Officer was of the opinion that the term deposits were not actually transferred. As such, he assessed to tax in the hands of the assessee-company, the amount of Rs.31,105 after deducting the expenses of Rs.10,895 from the interest income of Rs.42,000. This was confirmed by the Tribunal. On a reference: Held, that the fixed deposit receipts had, in fact, been made over to the shareholders and the resolution for the distribution of the proceeds of the said fixed deposit receipts were duly passed and intimation was also furnished to the Bank concerned about the transfer. On a construction of the letters written by the liquidator to the manager, UBI, and the certificates given by him, it was evident that the fixed deposit receipts were transferred in favour of the shareholders who alone were entitled to receive the interest. In any event, the company in liquidation was merely…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492