LexMANGALORE ELECTRIC SUPPLY CO. LTD. versus THE COMMISSIONER OF INCOME TAX, WEST BENGAL
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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913
MANGALORE ELECTRIC SUPPLY CO. LTD.
v.
THE COMMISSIONER OF INCOME TAX, WEST BENGAL
May 4, 1978
[Y. V. CIL\NDRACHUD, C.J., D. A. DESAr AND R. S. PATHAK, JJ.J
bicon1e Tax Act, 1922, S. 12 B(l)-Whether the word 'transfer' occurring,
in S. 12 B(J) of the Act refers to voluntary transfers only-Whether the 1vord
tra11sf1-r .\l1ou£d be construed ej11sde1n f.{Clleris with th!' lvords 'sale', 'exchange'
and requisitions'.
A
B
In exercise of its power under Section 4 of the Madras Electricity Supply
C
Undertakings (Acquisition) Act, 1954, the Government of Madras acquired
the appeJlants' undertaking and its properties were taken over on the date of
vesting viz. October 15, 1956. As per the option exercised by the appellant
under S. 6, the appellant was paid a compensation of Rs. 18,42,312/- applying
Basis 'A' method.
In the course of the appellant's assessment for the assess·
ment year 1957-58, corresponding to the accounting year commencing
on
April 1, 1955 and ending on October 14, 1956, the Income Tax Officer con-
sidered the question whether the compensation received by the appellant for
the acquisition of its undertaking was in the nature of a capital gain within
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the meaning of S. 12 B of the Income Tax Act, 1922. Deducting a sum of
Rs. 6.45,710/- representing the value of fixed assets from the compensation
paid by the State Government to the appellant, the Income Tax Officer treatea
the sum of Rs. 11,95,602/- as capital gains which was liable to be brought to
tax. The appellanf's contention before the appellate Assistant Commissioner
that the compulsory acquisition of its undertaking \Vas not a 'transfer' within
the meaning of S. 12 B (1) of the Act and 1therefore, it was not liable to
capital g:ain tax failed.
The Tribunal in further appeal and the High Court
E.
on a reference confirmed the said view.
The High Court on an application
under Section 256(2) of the Incon1e Tax Act, 1961, decided against
the
appel1ant on the question whether part of the compensation was paid towards
g,)od-will and therefore exen1pt from tax.
Disn1issing the appeals by certificate the Court.
HELD: 1. The v;rord 'transfer' is comprehensive and is regarded generally
F.
as com.prehending within its scope transfers both of the voluntary and involun-
tary kinds.
Without more, therefore there is no reason for limiting
the
operations of the word 'transfer' to voluntary acts of transfer so as to exclude
,,_.. compuisory acquisitions of property.
[917 G-HJ
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2. (a) The word 'transfer cannot be construed ajusdc1n generis with the
words \ale'. 'exchnnge' or 'relinquishment'.
[918 A]
(b) There is no roon1 for the application
of
ej11sden1
generis doctrine
unless one finds a category and "\Vhere the words are clearfy wide in their
n1ean.ing, they ought not to be qualified on the ground of their association with
other \'>'Ords.
[91 ~ C-I)J
In the instant c<1se. in the absence of a distinct genus or category, no pre-
sumption can arise that the word 'transfer' must be construed in the sense of
a voluntary act of transfer since 'sale', exchange' or 'relinquishment' are
in the norn1al acceptation of those terms voluntary acts.
The words (a) sale,
(b) exchange, (c) relinquisl1ment and (d) transfer must accordingly be given
their plain and natural meaning and there is no justification for restricting
the wide comprehension of the last of the four wordS to voluntary transfers
by thr application of the ej11sde1n generis rule.
[918 E.]
G
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J
914
SUPREME COURT REPORTS
(1978] 3 S.C.R.
A
Prove.st, etc. vf Glasgow v. Glasgow Trannvay Co., [1898] A.C. 631, 634
n
E
·G
H
£:.nd 1''.A.L.Cl.O. v. Bolton Corp11., [ 1943] A.C. 166 quoted with approval.
(c) The proviso to S. 12B of the Income Tax Act, 1922. as it stood prior
to its amendment by the Finance Act (No. 3) 1956 shows that the
word
'transfer' which occurred in sub~section (1) was intended to include transfer
of capital assets by reason of the compulsory acquisition thereof under any
la\v for the time being in force relating to the ·compulsory acquisition
of
property for public purposes. The object of the proviso, clearly, \Vas to take
away tran~fers by way of compulsory acquisition from the scope of sub~section
( 1). It is impossible on any other hyprothesis to give intelligible n1eaning to
the exception carved out by the proviso.
After the amendment of S. 12B by
the Act of 1956, the exception carved out Excerpt shown. Read the full judgment & AI analysis in Lexace.