ANARKALI SARABHAI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income tax Appellate Tribunal (hereinafter referred to as the "Tribunal") has, at the instance of the assessee, referred to us for our opinion the following questions under S. 256(1) of the IT Act, 1961 (hereinafter referred to as the "Act") :

(2.) OUT of the three questions referred to us question No. (2) is directly covered by a decision of this Court in Kum. Pallavi S. Mayor vs. CIT (1979) 8 CTR (Guj) 240 : (1981) 127 ITR 701 (Guj). Following, the said decision, this question shall have to be answered in the negative and against the Revenue. We, therefore, answer question No. (2) accordingly. In view of our answer to question No. (2), question No. (3) does not survive and, therefore, it need not be answered.

(3.) SEC . 45 of the Act is a charging section so far as capital gains are concerned. It lays down that any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in ss. 53, 54, 54B, 54D and 54E, be chargeable to income tax under the head 'Capital gains', and shall be deemed to be the income of the previous year in which the transfer took place. It is not in dispute that the preference shares held by the assessee were 'capital assets' as defined in S. 2(14) of the Act. The contention of the assessee, however, is that there was no transfer of capital assets when the company redeemed the preference shares held by her and consequently the profits and gains arising from such redemption cannot be brought to tax as capital gains. Sec. 2(47) of the Act defines 'transfer' as follows :