Raman Bhattathiripad vs Commissioner of Income Tax

K. P. Radhakrishna Menon, J.—According to the petitioners, the following questions of law do arise out of the common order of the Appellate Tribunal. The Tribunal, however, refused to refer the questions for the opinion of this court and hence the petitions u/s 256(2) are filed, is the argument of the petitioners :

" 1. Whether, on the facts and in the circumstances of the case, any profits or gain could be said to arise from the exchange of two capital assets of equal value, namely, 50 cents and 41.25 cents plus Rs. 13,750 and, if so, could it be concluded in law that both the transferors were assessable for capital gains ?

Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the value of 50 cents, being the capital asset transferred by Sankaranarayanan Bhattathiripad, would be the consideration received by the applicant ?

Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that both the applicant and his brother, Sankaranarayanan Bhattathiripad, were liable to capital gains in respect of the transfer by which 50 cents of land belonging to Shri Sankaranarayanan Bhattathiripad was exchanged for 41.25 cents of land belonging to the applicant along with cash of Rs. 13,750 ?

Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that similarly in the case of Sriraman Bhattathiripad, the market value of the land measuring 50 cents received by him from Sri Sankaranarayanan Bhattathiripad would be the consideration from which the cost of acquisition of such land has to be deducted ?

Whether, on the facts and in the circumstances of the case, the Tribunal is justified in relying on Commissioner of Income Tax, West Bengal and Another Vs. George Henderson and Co. Ltd., and The Commissioner of Income Tax, Calcutta Vs. Gillanders Arbuthnot and Co., ?

Whether a mere change in the holding of the asset would be sufficient to attract the provision relating to capital gains ?"

The questions, in our view, cannot be said to be res integra in view of the ruling of the Supreme Court, namely :

(i) Commissioner of Income Tax, West Bengal and Another Vs. George Henderson and Co. Ltd., ;

(ii) The Commissioner of Income Tax, Calcutta Vs. Gillanders Arbuthnot and Co., .

We shall, in this connection, reproduce the relevant portion of the decision in Commissioner of Income Tax, West Bengal and Another Vs. George Henderson and Co. Ltd., :

" It is manifest that the consideration for the transfer of capital asset is what the transferor receives in lieu of the asset he parts with, namely, money or money''s worth and, therefore, the very asset transferred or parted with cannot be the consideration for the transfer. It follows, that the expression ''full consideration'' in the main part of Section 12B(2) of Indian Income Tax Act, 1922, cannot be construed as having a reference to the market value of the asset transferred but the expression means only the full value of the thing received by the transferor in exchange for the capital asset transferred by him. The consideration for the transfer is the thing received by the transferor in exchange for the asset transferred and it is not right to say that the asset transferred and parted with is itself the consideration for the transfer. The main part of Section 12B(2) provides that the amount of a capital gain shall be computed after making certain deductions from the ''full value of the consideration for which the sale, exchange or transfer of the capital asset is made''. In the case of a sale, the full value of the consideration is the full sale price actually paid. The Legislature had to use the words ''full value of the consideration'' because it was dealing not merely with sale but with other types of transfer, such as exchange, where the consideration would be other than money."

We, therefore, are of the view that there is no need to have these questions referred to this court.

The original petitions, therefore, are dismissed.