LexJAMES ANDERSON, ADMINISTRATOR OF THE ESTATE OF THE LATE HENRY GANNON, BOMBAY versus THE COMMISSIONER OF INCOME-TAX, BOMBAY
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3 S.C.R. SUPREME COURT REPORTS 167 ously be decided on a fair and reasonable construction r960 of s. 19(6) itself, and the rule in question, even if Associated applicable would not be material in that behalf. We Cement companies accordingly hold that, on a fair and reasonable Ltd. construction of s. 19(6), the true position is that, v. though the expression "any party bound by the Their Workmen award" refers to all workmen bound by the award, G . d-dk 1 , . h 'd d b . a;en raga ar . notice to termmate t e sa1 awar can e given not · by an individual workman but by a group of work- men acting collectively either through their union or otherwise, and it is not necessary that such a group or the union through which it acts should represent the majority of workmen bound by the award. In the result the appeal fails and is dismissed with costs. Appeal dismissed. JAMES ANDERSON, ADMINISTRATOR OF THE ESTATE OF THE LATE HENRY GANNON, BOMBAY . . v . THE COMMISSIONER OF INCOME-TAX, BOMBAY (S. K. DAS, J. L. KAPUR AND M. HIDAYATULLAH, JJ.) Income-tax-Distribution of capital assets-Whether distribution mu.st be in specie-Sale of capital assets by administrator for distri- bution amongst legatees-Profit on such sales, if amounts to capital gains liable to tax-Income-tax Act, r922 (XI of r922), s. I2B(I), third proviso. The appellant was the administrator of the estate of one Henry Gannon, a resident of British India, who left for the ~ · United Kingdom in 1944 and died there in 1945· In the course of administration the appellant sold certain shares and securities belonging to the deceased for the purpose of distributing the assets amongst the legatees and thereby realised more than their cost price. The excess of sale price over the cost price was · treated by the Income-tax Officer as capital gain under s. 12B March 4 . 168 SUPREME COURT REPORTS [1960] •960 of the Income-tax Act and the appellant was assessed to tax on such capital gain for the assessment years r947-48 and r948-49 . .fames Anderson The appellant contended that there had been a distribution of v. capital assets by him under the will of Henry Gannon and there- Commissioner of fore he came under the protection of the third proviso to s. r2B(r) Inc:ime-tax, Bombay and was not liable to tax. Heid, that the appellant was not protected by the third proviso to s. 12B(1) as the expression "distribution of capital assets" in that proviso meant distribution in specie and not distribution of sale proceeds of the capital assets. So long as there was distribution of the capital assets in specie and there was no sale, there was no transfer for the purposes of s. r2B, but as soon as there was a sale of the capital assets and profits or gains arose therefrom, the liability to tax also arose, whether the sale was by the administrator or by the legatee. Sri Kannan Rice Mills Ltd. v. Commissioner of Income-tax, Madras, (r954) 26 I.T.R. 35r; Commissioner of Income-tax, Bom- bay North v. Walji Damji, (r955) 28 I.T.R. 9r4 and Gowri Tile Works v. Commissioner of Income-tax, Madras, (r957) 3r I.T.R. 250, referred to. CrvIL APPELLATE JURISDICTION: Civil Appeal No. 335 ofl956. Appeal by special leave from the judgment and order dated August 25, 1954, of the Bombay High Court in Income-tax Reference No. l of 1954. N. A. Palkhivala, S. N. Andley, and J. B. Dada- chanji, for the appellant. K. N. Rajagopal Sastri and D. Gupta, for the res- pondent. 1960. March, 4. The Judgment of the Court was delivered by s. K. Das J. S. K. DAS, J.-This appeal by special leave is from the decision of the Bombay High Court dated August 25, 1954', in Income-tax Reference No. 1 of 1954. The only question which falls for decision in the appeal is the true scope and effect of the third proviso to old S. 12B(l) of the Indian Income Tax Act, hereinafter referred to as the Act. The facts relevant to the appeal are these : one Henry Gannon was a resident of British India, who used to be assessed to income-tax under the Income- tax law of this country. He left India in 1944 for the United Kingdom where he died on May 13, 1945. He left a will dated November 18, 1942 by which the National Bank of India Ltd., in London was appointed Executor of his estate. Ou October 1, 1945, probate ~- .... ... ··-.. . ,, - 3 S.C.R. SUPREME COURT REPORTS 169 of the will was granted to the said Bank by 'a Court z96o of competen
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