Commissioner Of Income Tax v. Shivakami Co. Pvt. Ltd

cat!ISSIONER OF INCOIE TAX v. SHIVAKAMI CO. PVT. LTD. MARCH 18, 1986 [R. S, PA~ AND SABYASACHI MUKHARJI, JJ. ] Indian Income Tax Act 1922/ Income Tax Act 1961, s.12 B(2) first proviso/ s.52 - Capital asset - Acquisition of -Understatement of consideration in transfer of property -Understatement of value, a mis-statement of value - selling at under value to defeat revenue different from understating value in a document of sale. The respondent, a private COllpany under the Companies Act, 1956 in C.A. 1533 of 1974, had shares in two private companies. During the relevant period, it sold those shares and according to the respondent-assessee, the sales resulted in a loss. The shares were not quoted in stock market. However, the Income-tax Officer held that the break-up value on the date of sale of the shares in the two companies was Rs.1,72,800 and Rs.1,54,000 and after deducting the cost price of the aforesaid shares of Rs.81,201 and Rs.1,00,000 respectively from the above said break-up value, he determined the capital gain at Rs.91,599 and Rs.54,000 respectively under the first proviso to section 12-8(2) of the 1922 Act. The Appellate Assistant Commissioner as also the Tribunal rejected the appeals of the respondent-assessee and upheld the order of the lnco11e-t:ax Officer. Aggrieved by the order of the Tribunal, the respondent-assessee went to the High Court in a reference. The High Court allowed the reference holding that the first proviso to sub-section (2) of section 12-B of the Indian Income-tax Act, 1922 was not applicable. It observed : (i) that the sale was true; (ii) that the consideration was not understated; and (iii) that the explanation given by the assessee for effecting the sale was not acceptable. The same question of law arose in the other civil appeals. Dismissing the appeals, SUPREME COURT REPORTS Bl!LD : 1.1 The proviso to section 12B(l) of the Act can be invoked only where the consideration for the transfer of capital asset has been understated by the assessee. The first proviso to section 12B(l) of the Act provides 'full value of the consideration for which the sale, exchange, relinquishment of transfer is made' , to be taken as the basis for the compu-tation of , the capital gains. Therefore, unless there is evidence that 100re than what was stated was received, no higher price can be taken to be the basis for computation of capital gains. The onus is on the Revenue - inferences might be drawn in certain cases but to come to a conclusion that a paricular higher 8""'Unt was in fact received 1111St be based on such material from which such an irresistible conclusion follows. The proviso helps or enables the depart11ent by provi-ding a way to determine the market value. But the proviso is applicable only where the full value for the consideration has not been stated. (889 G-H] 1.2 When a conclusion of the fact finding body is based on an inference from primary facts, then the findings of facts are not amenable to challenge but the inference drawn from the primary facts are open to challenge as conclusions of law. It is also open to challenge the same on the ground that the conclusion of fact drawn by the Tribunal was not supported by legal evidence or that the impugned conclusion drawn from the fact was not rationally possible. In such a case, it is neces-sary to examine the correctness of the conclusion. (886 H; 887 A-B] ~sioner of ~ax v. Rajastban Mines, 78 I.T.R. 45, relied upon. MABT ATI, AEA cic: 0Aeeitaiai sto feo (18 aa, 1986) (waraqfa azo yao qeR ate Beuatet quit) .|Sree affirm, 1961(1961 et 43) —aner 52—Rae freer BNI ara ora ae ewe dea daz, 1922St ater 12a(2) & see qegn F& aa afataay,1961 Rhee 52. B gadaq Bary NA wt ws7—aes 52 &t sear (2) stata tea agi faar at amar =wai dette aiferat s aac & ylang wr frerifeat awaeaa fear at, rra zat aeal H, faulfeat ¥ sea aac,@ aafaa sfase orga aca ga geo a eq afaa feara at gat aera A ora fear ar—sea scare featGarratt ar ate aemat denagize & age & agi feetMe A AY at gat wet faeaifedt A sad gree teasfacer St agt eq Balers} @ waar sk ast eq awae feat gti. aadfaaifead efeaait stadt ste fate daft aitea & ea a wae at area dt gat fez efesar amreattaa fro % 800 Bat.81,201 etd aUTa we AZgeattem Fraat fate ® 1,000 Jarue are wag Fad? Fi a Rat sat aah a aafya arqayGatazT sre fo et BAM:60,000 sataart 75,000 aq F[4-3-1957 at Sa feygram dau daz, 1922 ¥t aver 1241(2)BMA TeGH Hl aT Ha BU ast afaarad ¥ sam Had arATATT HET 1,72,800 Hq ae zat ary |r 154,000 wag quar4saa Taw F are yer Fa sraHr afaard 2 aq eA FeHTTe UHH Ay, Ga get afar aH sae aa feataraar faga ® eq Re asa emaray F aan frat faatfedd 9a 4 facta fear. aa: fawn a sea earareae A gaTTTT TT HFgaaan eararag A adie ah adtea aifea HII BY, ufafautfva—1922 % dae a are 12-d(2) % gaaquga Hag safes 3 fe gana afaara a dana & fag gaghana at pa aes, faee az fares, fafaay, aT aaamater Prat aa 8, arNT ATAT NATGy AD Ta TH FT AAAarg nenaat fe frat sfana ar aaa fear war & gaa afarogfama gta frat mar ar, #8 it geaax yea daira afraTT“at anoaramr amareaa¥ ararot aHaT| ag alas HW BT AKfe afaca araai #da faced fama or aaa s wsaea faaqt 21 farg, 08 favsa, fa ale fafnee grat THT aera[#]gia at aeoft, ar fawratarar tal aradl ot arafea garcarfay frat tar wg aafaver frend fawaar att Tegt qe adar are goer aa feat vat &1 (FU 17). set ae are s2 at aqare(2) faama sataa % fagaaa sagt an gaat ary Fae ael frat ar AHA sagtcating anfeadi# seater & sfana ar faatheat t wana featat amar gat usd i fraifedt@ gaa were a aafad ofaerga aoa aa Wer Hwa afat fear gt A sar avers A Tedfear ar ate te aaeae waar alsa Bl arfad HLA BT AMTcraea fawn gt2y sta aoarer Ue Peat Sarva ave atenemial gage F Tae A aa Feat grt 8 ary aa Val wetfauifedt Raga grr sica ofan saat et A Tea FT. gt.ayat ga agt eda one fear ati uated faarT az maalaeeis sr ure ar fe fase dae aeatas F gana feat Tat aT 4fa ag aifaa Ua ar are PH AT HA EA TT al Tat 1 AeA ATwana gt er a faeaT BIT lar Jt User a aaa % fag arta@t an ger oe aaa ale fama daet aearaa Fo yea HT TARTHAT at wan-aan ara81 (Ta 14 AT 16)- sic fato [rare yarsit] 63° agar fag eer = 14, 16, 14, 16, 16,etCrirat) {1581}(1981) 3 argo 2to azo 597 :Ro ato ant aa mraRT atryaa, galgam = 14, 16, 14, 16, 16,MNT WH TET;etCrirat) {1969](1969) 78 ato to HIyo 45: 2 AORTA TATA TEMATBA fafaa adtei afewrfcar: 1974 a fafan site do 1532-35 1966 % BT ATAAT Fo 79, 83, 98 ate 99% nara wTwaTaraa & AVG 7 ATF, 1972 % foie ate ade % faag at 7sfafaa ates|- aataral et sit &Ute ato HAA, FATT Wo |garftol att at Fo Mo gatseat at ate &TE aa| arate at fauta emiagfa aenardt gaat & fear|7 taania get— Sater afar aqeyz-133(1)% aftr qgra-esq FATATAT F TAIT GAT al AEByeo sah2. faatfeat & wea qx sfoeaa geum_ aga daz, 1922 faatfeat & wea qx sfoeaa geum_ aga daz, 1922 & wea qx sfoeaa geum_ aga daz, 1922 wea qx sfoeaa geum_ aga daz, 1922 qx sfoeaa geum_ aga daz, 1922 sfoeaa geum_ aga daz, 1922 geum_ aga daz, 1922_ aga daz, 1922 aga daz, 1922 daz, 1922 1922 (faa at 1922 #1 tae wer Tat &) # art €6(1) & area TFssaTUMNAT BT AIT AAT AAT HT anal aaaA fates ar ua zg faafna faar mar ary Seq ematay A ea gt fava gre gaatal st taserer fear|:oo In the instant case, the facts found were that there was a sale. The High Court has stated that the Tribunal had found that the consideration was not understated. The High Court also notices that the explanation given by the assessee for G effecting the sale was not acceptable. The onus was on the Revenue to prove that there was understatement in the doCUlllellt not that the goods were sold at under value. There is no evidence that the full consideration received by the assessee in the transfer of the asset involved in these cases has been understated. The revenue has made no attempt to establish that H there was any under-statement though it might be that shar'"'1 were sold at an under value. (888 B-01 C.I.T. v. SHIVAKAMI CO. (sABYASACHI MUKHARJI, J.] LP. Verghese v. 1--Ul< Officer, Em•!nJlaw fi Am-., 131 I.T.R. 597, followed. 2. Understatement of value is a mis-statement of value. Selling goods at an undervalue to defeat Revenue is different from U!lderstating the value in the document of sale. (888 D] J:n the instant case, there is no evidence direct or inferential that the consideration actually received by the assessee was more than what was disclosed or declared by him. [888 F] Capital gains was intended to tax the gains of an assessee, not what an assessee might have gained. What is not gained cannot be computed as gained. All laws fiscal or other-wise 1111e.t be both reasonably and justly interpreted whenever possible. Capital gains tax is not a tax on what might have been received or could have taxed. (889 E] CIVIL APPELIATE JURISDICTION : Civil Appeal Nos. 1532 D -35 (NT) of 1974. From the Judgment and Order dated 7th March, 1972 of the Madras High Court in Tax Cases Nos. 79, 83, 98 and 99 of 1966. s.c. Hanchanda, Ms. A. Subhashini and K.C. Dua for the Appellant. Nemo for the Respondent. The Judgment of the Court was delivered by SABYASACHI HllKllARJI, J. These appeals are by 'certifi-cates granted by the High Court of Madras under article 133(1) of the Constitution. An identical question of law had been referred in respect of four separate tax cases to the High Court under G section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as '1922 Act') at the instance of the assessee. The High Court disposed of these appeals by one co11D110n judgment. The High Court had to answer the following question :- 11Whether, on the facts and in the circumstati.ces of the case, the conclusion of the Tribunal, that for the purpose of the computation of capital gain on the sale of the shares in East India Corporation Ltd., Madura Insurance Company Ltd. and Pudukottah Company Private Ltd. the first proviso to sub-section (2) of section 12B of the Indian Income-tax Act, 1922 was applicable, is correct in law?" The High Court answered the question in the negative and in favour of the assessee. According to the High Court in the instant case, the shares held by the assessee company were sold to two persons who were directly or indirectly connected with them at prices considerably less than their break-up value. 2. faatfeat & wea qx sfoeaa geum_ aga daz, 1922 faatfeat & wea qx sfoeaa geum_ aga daz, 1922 & wea qx sfoeaa geum_ aga daz, 1922 wea qx sfoeaa geum_ aga daz, 1922 qx sfoeaa geum_ aga daz, 1922 sfoeaa geum_ aga daz, 1922 geum_ aga daz, 1922_ aga daz, 1922 aga daz, 1922 daz, 1922 1922 (faa 3. Sea marae at farafafaa soa ar gat sar g— aT areaeay ake saat afefeafaat F afaReaaI ag facag, fe gee afesar aiditma fafats, agaaaaitea art fafats ate qeateer weal qeke fafats &tayfama at gala afeara’ at daar & gatsraret wena faq daz, 1922 Ht arr 12-at HY SoM (2) faq daz, 1922 Ht arr 12-at HY SoM (2) daz, 1922 Ht arr 12-at HY SoM (2) 1922 Ht arr 12-at HY SoM (2) Ht arr 12-at HY SoM (2) arr 12-at HY SoM (2) 12-at HY SoM (2) HY SoM (2) SoM (2) (2) efeaawena faq daz, 1922 Ht arr 12-at HY SoM (2) faq daz, 1922 Ht arr 12-at HY SoM (2) daz, 1922 Ht arr 12-at HY SoM (2) 1922 Ht arr 12-at HY SoM (2) Ht arr 12-at HY SoM (2) arr 12-at HY SoM (2) 12-at HY SoM (2) HY SoM (2) SoM (2) (2)mT TATA quegH ay fat ar aHaT aT, fafey at afcz F agtCCae|: 4, Gea Aga F Sa IAT HTT THIUTCAG ale fratfear& qa 8 fears 5. sea rama B gaqary ga aay H, fralfedt woahare enfea Gaz at eafaaay wy, Ht sae seaea: aaa aa: atag 8, val aaa Wer a HG HA HAT Te FF aT 1. 6. Sar fe HIT Tere far ar Tar %, sea etigag > aTara araal ot ow area fait feats Tad set HT AAAT To 83/65.qx faare wear ofat gat ga aga F efaaot weal orgtefafazs fanifedt a1 ag qaqa qgater usa & fanfaa on seteEqatan, ag Faat at aie afafaaay faa ana sea 1956earatag & ada a gaara oe aaet ge dt faarz1 fratfed fearaqal at gare tat HUIgota: saree 50 Fav ately rai} ait,faay & seta at THT ea 1,000 BIg Bl Tal gana aaa F ahagaara mreae fafats ate ggetg: areattwa orga fafate aaa:Fawaiwse8, Parse sedH Fara25-25 AaetFyfratfeat >14 wry, 1957 wt aaa areoaifea gee gfear FriafafRts &$00 Har ate ng gaatta waat fo F1000 Fax gaaragrgaz fafate, alarazt at HAM: 60,000 e7q ate 75,000 sag agaufaa & aa ay fer,gee efsar sistingfafats800Val HT TA Fer 81,201 wag aay Ager gary HqH)} fafate F1000 fat sr mr gee 1,00;000 wie ary sat fea faatfead +qgaigt wal orgie fafees FH aqt 499 Jaz aaa BrqdTsigiz fafats at aa qea aula 4,990 equ Hay fer, fezgfear arotima fafads ager gealtea madd orgae fafads ate:qgaigt maat srgaz fafaes HF Fat Fay ararz A He al faq171 afaawr > aaa tag afafafeaa fear aar fe fase at afaawr > aaa tag afafafeaa fear aar fe fase at > aaa tag afafafeaa fear aar fe fase at aaa tag afafafeaa fear aar fe fase at tag afafafeaa fear aar fe fase at afafafeaa fear aar fe fase at fear aar fe fase at aar fe fase at fase at atana a fez gfearaiRaa a fez gfearaiRaa fez gfearaiRaa gfearaiRaafafats # % 800 aad aaraga # % 800 aad aaraga % 800 aad aaraga 800 aad aaraga aad aaraga aaragageqiter ara fafats ara fafats fafatsHH 100 Aa Hl 100 Aa Hl Aa Hl Hlaeaa-aaT yea AM: yea AM: AM: 171 afaawr > aaa tag afafafeaa fear aar fe fase at afaawr > aaa tag afafafeaa fear aar fe fase at > aaa tag afafafeaa fear aar fe fase at aaa tag afafafeaa fear aar fe fase at tag afafafeaa fear aar fe fase at afafafeaa fear aar fe fase at fear aar fe fase at aar fe fase at fase at atana a fez gfearaiRaa a fez gfearaiRaa fez gfearaiRaa gfearaiRaafafats # % 800 aad aaraga # % 800 aad aaraga % 800 aad aaraga 800 aad aaraga aad aaraga aaraga2Jgeqiter ara fafats ara fafats fafatsHH 100 Aa Hl 100 Aa Hl Aa Hl Hlaeaa-aaT yea AM: yea AM: AM:1,72,800 RaWHi 1,54,0C0 Ba altIda aaT-HaAT aeal F F- f De/ayo™.| *AT: 81,201 He 1,00,060 BU Hala wT yea Bt ezie Rare As mentioned hereinbefore, the four cases were dealt by the High Court together. It may be appropriate to ref er to Tax Case No. 83/66 first. The assessee in that case was Rukmani Co. Private Ltd. lt was a private limited company incorporated in the former Pudukottai State and at the time the High Court dealt with the matter, was a company under the Companies Act, 1956. The paid up capital of the assessee-company consisted of 50 shares of the face value of Rs.1,000 each, fully paid up and the shareholders during the material time were Padmanabha Private Ltd. holding 25 shares and Pudukottah Corporation Private Ltd. holding the remaining 25 shares. On 14th March, 1957, the assessee sold 800 shares held by it in East India Corporation Ltd. and 1,000 shares held by it in Madura Insurance Company Ltd. to Pachnayaki Private Ltd., Coimbatore, for a sum of Rs.60,000 and Rs.7.5,000 respectively. The cost price of the 800 East India Corporation Ltd. shares was Rs.81,201 and that of 1,000 Madura Insurance Company Ltd. was Rs .1, 00, 000. On the same day the assessee had sold its 499 shares in Pudukottah Company Private Ltd. to Padmanabha Company Private Ltd. for the cost price of Rs. 4,990. The shares in East India Corporation Ltd., Madura Insurance Company Ltd. and Pudukottah Company Private Ltd. were not quoted in stock-mark.et. It was ascertained from the order of the Tribunal that the break-up value on the date of sale of the 800 shares in East India Corporation Ltd. was Rs.1,72,800 and the 1000 shares in the Madura Insurance Company Ltd. was Rs.1,511,000, Deducting the cost price of Rs. 81,201 and Rs. 1,00,000 respectively from the above said break-up value, a sum of Rs.91,599 and Rs.54,000 respectively had been determin-ed as the capital gain under the first proviso to section 12B(2) of the 1922 Act in respect of the sale of shares in East India Corporation Ltd. and Madura Insurance Company Ltd. The Tribunal gave a finding that there was no capital gain in respect of the sale of the shares in Pudukottah Company Private Ltd. · Discussing the facts of Tax Case No. 79/66 in case of Sivakami Company Pri><ate Ltd., the Tribunal held that the assessee was liable to pay capital gains tax under the first proviso to section 12B(2) of the 1922 Act and it also held that the assessee had sold 499 shares in Pudukottah Company Private Ltd. to Padmanabha Private Ltd. for Rs.4,990 in respect of which the Tribunal held that there was no capital gain. In Tax Case No. 98/66, the assessee was Pudukottah Company Private Ltd. which was a private limited company with a paid up capital of 3,000 shares of the face value of Rs.JOO each with Rs.10 per share paid up and the shareholders were certain above-mentloned companies. In respect of sales of these shares, the Tribunal held that the assessee was liable to pay tax on the capital gain under the first proviso to the said section. More or less similar is the position in Tax Case No.99/66 where the assessee was Pudukottah Corporation Private Ltd. In all these cases, in the original proceedings for assessment for the year 1958-59, it was held by the Appellate Assistant Coflllllissioner, accepting the contention of the respective assessees, that the profit or loss on the sale of the aforesaid shares should not be considered as trading profit or loss on the ground that the shares were held as an 1 investment and not as stock-in-trade of a business and the assessments were modified by excluding therefrom the profits on the sale of those shares included in the assessment. The Income-tax Officer thereafter reopened the assessment under section 34(l)(b) with a view to assess the capital gain 886 FAM: 91,599 BIE ate 54,000 ea at Uiftat sez Sear Tireatt Agu gear seat fatale® & Raa & fanaa & dae ¥1922 % Qae share 12(2) Sean gege ® ate gaitafaaa % ec % aaah a asafaatr A ag frondfrerar fis qgater arqat greta fate F® Va & fae dh aayFae dsilae afrara aa gat ary 7. fare} aqdt gredz fafaes & dda Fax maar To 79/66 & seat ah aah wze et afarcr & ae afafaaiteeFear ar fe fratfedt 1922 & dae at gre 12-2(2) & ser cogerweeta GofaPrera ax ar gary at & aifacareita qr ate gaz at afafiatfer fear fe fretted qgnlet eq} greefafats % 499 Raz ceara maz fafats st 4,990 wqIT Fay fereat gah dae Ff aEgatne afaars met gat ar | a8. BX ATH Fo 98/66 F geater HET HT eto Frathedtfae qt 10 et oft Fat aareq Wer ast 100 wat afeaer % 3,000 Favt at eared Gof Mt aan Tata saa iafaaTarafiat at) gat gat fasq & gag Ffear Tag afrfratfea Pear an far faatfedt az gaa are & ToT TeGH FH arehtaegata afta ox at ar dary wey aT qlface aT 9. yates eT & tet A feafe wxaaa wo 99/66 #2fared qgater areata saz fro fagifeat ar| 10. 4 at araat¥ aq 1958-59 & fac faaizor ara}qa aaafeat & adel aera aged + aafaa faaifefrat atcela ot edtare He ga ag afufratfer Peat at fe ordae Tay& faa oe aa ata ara azar gift ga aere ct earareaa ATHwaar arf agt art ateit arfee fe aad ar aren fafeata ® ega fis feet sreare 3} sarqrea cere & wa F fear aa at Tarfratwnt ar aqreawyt save sa aay ® fama at ala are areot agate ee feat vat at ait Prato # afeafea far Te ayRas WIT gaHt afeard > Tad ¥ fewq 2 BTYT FTaafrare ot frater et % ee 8 are 34/ 1) (at) & aeta faz & frateor fear vfs afeacor gre area H fara ae fread Fdaa Fao age ge al wa: ahaa F ante oT ears RAT AATgrrr i afanwr % aeg aval & ara-ara farafafad watfreatatat at— “gfe gg ara faat ate fis 14 ard, 1957 at fay agway & fase ae wears 3g faatr sy gat a afsa Featat al Wt ag araaae ad @ fe Ho MAT TT aera TAA} aft sarax aaka faa maoH ate a ag er fha farsa Hl CHATA Seem aeaHTe HI TITY afat HW FTat at gadl atx ara dt ag aaa fe saa ag giltafaary eta gay ar al ar, at ava qa fata 3alt saat Hy are vat 2| faatfedt ar faart argete ge ag aaa F aad <VTfa dee efsar areata fro% gad ar fase aeu faesat< 60,000 aaa faatfea feat var at) ga ag frayfraraa Sf Patt aa feafa ¥ ca aodsad aTgat ataa ox qeaiea feat sat) saat wart aca wtagt att”| 11. ga fasay o¢ faar< Hw ana seq raTATAT F 88 aTsodro arto, faat adtardta fang at sfaaer fearaqaré, >‘Jo 316 Tt ag Halfaeafad at at fH frase ae faa ae fe—(1) fase areaFH gat ar;(2) afar ar aanaa ag fearwar at; atz (3) faatfed a farsa wet ar at eqedtaco fear at“ag eatery sat at| Iea earaTag a ag aarfaeafaes wt at fe zataq azal e atare ot ag wet at amare fefaaifedl * fawaasta afiara & ade F aga afaa & Tay aaa gay wal ea& sem a faar zg1 sea eararag & ag aa caae fear or fe aafaafar @ fafafese eq a ag fasng agt frarar fe fasa doitafaata & atafead afar & aaa agar gat BAY HW, H GEM@ feat var geat wt gaa ag facay fasrar 2 fe fastaafafaam at attr 12-a1(2) ar saa qegqe caraifaa et 8 ary‘feat gi STUSTAA To Fear Hat sto fete [rato Hast] . 67 12. Seq earareaa | saga F ade F ga seat gz faarz‘fear fe aar ga F® araz HY afsecr % fromd & area geadafear at aRatd ? ag aearfor 2 fie wa Peet aed eT car at|‘aretorenfea faara at até gar 3 wa dea frend fare srefqe fasaet aval gt 2 qatdt AMT ag TT AAATT et ar watt TZfry sa rafae aeat & are ye ae ag aPATAl F ArITe Iz‘fafafaras fread frprar war et at qatdt & at anat @1 va eaMarC atated toot aact & fe aferweor are frarer aa‘em fra fase fine fafire area ox ararfee vet ar reat ag‘fe aca % arare ge faarar qat arafaa frond gfraqad wr &fraretar daa aat at) ke feat aay F fang a AaTTar stTee HVAT HraayH st Tray F 1 a gray F arqHe aga TAAerate erga! are are Hea cqraaa & fathead ar qaarafear ar waar’.ag feafa ca emrorag &® ate fafavaat 2-Bearfce et zat 3 886 arising on the sale of the shares. As there was some argument as to what the Tribunal actually found, it is better to ref er to the order of the Tribunal. The Tribunal, inter alia, observed as follows : "Assuming that the sale on 14th March, 1957 was actuated by the sole motive of sequestering the shares from the Department it is not necessary that some of the shares which are very valuable should have been transferred at a loss. It falls flat and unconvincing to be told that the sole object was to sequester the shares from the clutches of the Government and at the same time proclaim that the motive was not avoidance of capital gains tax. The assessee's learned counsel was not able to tell us how exactly the sale value of the East India Corporation Ltd. came to be fixed at Rs.60,000, We ·find that in another case the shares in this company had also been valued at the same price. The cost of acquisition was also the same." Dealing with the finding, the High Court observed at page 316 of 88 I.T.R. where the judgment under appeal is reported, that the facts found were (1) that the sale was true; (2) that the consideration was not understated; and (3) that the expla-nation given by the assessees for effecting the sale was not acceptable. The High Court went on to observe that on these facts, could it be said that the sales were effected with the object of avoidance or reduction of liability of the assessee for capital gain. The High Court was of the view that the Tribunal·though specifically did not find that the sales were effected with the object of avoidance or reduction of the liability for capital gain, had concluded that the department was justified in applying the first proviso of section 12B(2) of the Act. The High Court discussed on this aspect the question as to whether the finding of the Tribunal could be interfered with in a matter like this. It is well-settled that when a conclusion of a fact finding body is based on an inference from primary facts then the findings of fact are not amenable to challenge but the inferences drawn from the primary facts are open to challenge as conclusion of law," It is also open to challenge the same on the ground that the conclusion of fact drawn by the Tribunal was not supported by legal evidence or that the impugned conclusion drawn fr0111 the fact was not rationally possible. In such a case it is necessary to examine the correctness of the conclusion. Reliance may be placed on the decision of this Court in Coml.ssioner of Income-tax v. Rajastban Mines, 78 I.T.R. 45. This position is well settled by many decisions of this Court. It may be mentioned that section 52 of Income-tax Act, 1961 (hereinafter referred to as . '1961 Act') corresponds to the first proviso of section· 128(2) of 1922 Ac~. The first proviso to section 128(2) read as follows: "Provided that where a person who acquires a capital asset from the assessee, whether by sale, exchange, relinquishment or transfer, is a person with whom the assessee is directly or indirectly connected, and the Income-tax Officer has reason to believe that the sale, exchange, relinquishment or transfer was effected with the object of avoidance or reduction of the liability of the assessee under this section, the full value of the consideration for which the sale, exchange, relinqubhment or transfer is made shall, with the prior approval of the Inspecting Assistant Commissioner of Income-tax, be taken to be the fair market value of the capital asset on the date on which the sale, exchange, relinquishment or transfer took place." -13, 38 areata F ag gerade 8 fe araHt afafaaa, 1961(fart ga srt 1961 ar afsfrrt gr car 8) a are 52, 1922So Rae a aver 12-2 (2) & gah geaa & aaa 21 are 12-t(2)|BT ToT qegR a MoT freafafes B—| “aad ag aa safe agi ag cafe, at fagifedt &fara, fafraa, ear azar seen gre gsit anfer asa‘HAT 8, freaifeat 8 acaera: at adara: dafaa & ate araHe| afgard & ora ag favara wee ar areor & fe Bar fra,fafa, cama aaat aeaea faaifeat & afar ar ofcada ~¥agat Fag ge NAT2|7 “Provided that where a person who acquires acapitalasset from theassessee,whether bysale,whomexchange, the relinquishment assessee is directly or transfer, or indirectly is a personconnected, with_the sale, exchange, relinquishmentortransfer waseffected with the object of avoidanceorreduction of 78 BIRo Fo WIXo 45. BIRo Fo WIXo 45. Fo WIXo 45. WIXo 45. 45.and the Income-tax Officer has reason to believe that 1 (1969) 78 BIRo Fo WIXo 45. BIRo Fo WIXo 45. Fo WIXo 45. WIXo 45. 45. max at ey wey e seer a feat war at, Fal te fara,fafana, cama saat arte F fre afar BT Ger Fea+ffatian aalan argad & gt agatar &, a faa, fafrag,eq agar eae Ht archer Hr sit arfer Ht Shad TAT anHea AAT ATGAT 1” 14. 1961 ® afefaar at are 52 ga eataTeaa & faseBo Glo adie FATT araee ayaa, gaigaa ae oF aaah ateaaa Hag at1 ga earataa > ag afafaatfca frat at fis Tat wyaa grat 52% stare (2) faaara satafag areata @ etae gaat aaa Raat aal frat aT aHaT ge Tel qairret anfeaatgaem & sfana at fraifedtA aavea far et aay gaz weex faagifedl¥ sat arte a casa clans st Fa Fea VI AeI amm afua frat at at wat areda F siet feat ay ate va saatagat ator at atfat BTA BT ATT UIT fast Gist eacaraaa x ag Nafaeafea at ay fe cat stare va feat3Sqraard ary alt aaatal TeTaARIe & ddaq F aat frat gat aany ad dat set fraifeat 4 ary arer sea Thame Ft ae ETT LLsamt at a agar Ga aa wT SF wae fear eT 15. wmea faatn st ae & mega ae H ag aie at TEdt fa afantm alt sea alata datX ag catare feat at fegaara daraare Uses frarT F ara a fama aw % vera a farme X11 get raraTaT A ag Aa aaa frat ¢ fa afgatn 4 ag tfasay fastarat fe sfanat at aarar agit fear aat &t(aattataa gat feat 2g)| Uses fant & Brseta A ag satethe liability of the assessee under this section, the fullvalue of the consideration for which the sale, exchange,relinquishment or transferis made shall, with theprior approval of the Inspecting Assistant Commis-sioner of Income-tax, be takento be the fair marketvalue of the capitalasset on the date on which the,sale, exchange, relinquishment or transfer took place.” , 1 (1981) 3 Aiko eto MIT 597, : wa fis ag faowd adh val a cad ate ag fasad fara ar amarar fa afar ar ramet agt fear mar) sea satataa ¥ ge(NN ater ah at fs fra & dae F fratfedd a a eqedterzoy fearsag calara aEt eI 16. sat fe Bo toatts a ama!¥ ea cqrgraa %fafasaa & seta stare fa uses faara qe ag afar wet araifaat wet Br ATT fH ATT HT ToT TT TAT TAT | Ae BT HaHAT[[al]]_oareay fe faa aaah cera F aaaea fear qatar a fe agat yea ar faear wer glare) wats F aaa % fae ara wt aTWea It AAA ae fama gael cearagy F yer Hr aaeaa Hear atATT-ATT ats F 1 UAE fray F Hrgeta J gg acitea 2gu, fea nine & aval at gcoyfe a fraifedd wr germs eqee ar, agwel fa arra feasH at agar aga afer 8aa: star fe afgacor4 yaar at sea aA B aegl B arene at ag faong fara arerat at fe ceaFY acer ar aaaaa fear aarar:waferme qatserra garwargae fret wt ate were ga aratfers wart fear gus aratBr STAT atfee HAT fe sera 8 aI at saaT ofagee at at atreaaar at ad al fea wet} are ar fraga uaefaarr gre fear sat afewsa sare arate seat atcarqatfas oer grasa vel @ fe faeifedt & areca % wy ofansted far at ag vam are sae agar afer fea aa ofan &afas ary wat cera & ata ar ada fae ae fearmare|Y user faurr & ara at fan wet a) eeer vl fag az ct we zfeg ag aea fe sae fae faatfeat a cearae F feed facar aeqat aaa fear eg fag val fear ware. afeneor ® ae 8 salaart areft ara ag at fe seat (fraifedt) areafan ate ger geeqHt al aatar ufaal & afemtaa & gag F aware gra ga Fadatfaiar vam aga faa H at ascaet & aaa eq & ar acag aarag J at odta stat & fe Fat ate