COMMISIONER OF INCOME TAX Vs. BAI VINA

JUDGEMENT

(1.) BHAGWATI J.

(2.) AN interesting question of construction of sec. 2(6A)(c) of the Income-tax Act arises on this Reference. The Reference relates to the assessment of the assessee an individual for the assessment year 195657 the corresponding account year being Samvat Year 2011 (i. e. 27 October 1954 to 14th November 1955). The assessee at all material times held 18 shares in a limited Company called the Gujarat Spinning and Weaving Company Limited which we shall for the sake of convenience briefly refer as the Company. The Company went into liquidation on 23rd October 1954. On 20th November 1954 the Liquidator of the Company decided to make a distribution of Rs. 3 500 per share amongst the shareholders and pursuant to this decision the assessee received from the Liquidator on 25th November 1954 a sum of Rs. 63 0 as and by way of distribution in respect of her 18 shares. The sum of Rs. 3 500 per share distributed amongst the shareholders was composed of the following items:-

(3.) THE determination of this question depends on the true character of the receipt which we have conveniently described as deemed profit under the second proviso to sec. 10(2)(vii). Is the receipt real profit or is it fictionally regarded as profit though in fact it is not? This inquiry is necessary because as observed by Lord Radcliffe in St. Aubyn (L. M.) and others v. Attorney-General (1951) 2 All E. R. 473:-