AIR 1968 SUPREME COURT 200 ::66 ITR 692 ::1967 2 ITJ 873 ::1967 3 SCR 876 ::1968 (1) SCJ 96 ::1967 2 SCWR 869

Supreme Court Of India

(From Andh-Pra.: AIR 1965 Andh-Pra. 342)

Hon'ble Judge(s): J. C. Shah, S. M. Sikri, V. Ramaswami , JJJ

(A) Income-Tax Act (11 of 1922) , S.10(2)(vii)— Applicability - (Cinema business - Computation of profits - Assessee Company agreeing to sell Cinema concern for certain money consideration - Document actually executed purporting to be exchange deed - Consideration stated to be preference shares of certain Company - Whether sale or exchange - Deed - Construction Preamble if can control operative part of document. Transfer of Property Act (4 of 1882) , S.8, S.54, S.118— In pursuance of an agreement to sell a Cinema house with all its equipments and fittings as a going concern for a consideration of Rs. 1,20,000, the assessee company executed a deed called 'the exchange deed' in favour of the vendee and consideration for the same was received by the assessee Company in the shape of transfer of 5 per cent tax-free cumulative preference shares held by the vendee. The deed recited separate valuations for the immovable property, movable property and the goodwill of the business. The question for decision was whether the transaction in question was a sale within the meaning of the second proviso to S. 10 (2) (vii), Income Tax Act so that the amount by which the written down value exceeded the amount for which the assets were actually sold could be included in the taxable profits of the assessee. Held on a consideration of the terms of t....