COMMISSIONER OF INCOME TAX Vs. MINERVA TALKIES

JUDGEMENT

(1.) This reference is made under s. 256(1) of the IT Act, 1961 at the instance of the Revenue. The question referred to this Court is as follows :

(2.) It arose on the following facts : The assessee is a registered firm. It was the owner of a cinema hall, viz., "Minerva Talkies" at Viskhapatnam. The assessee agreed to sell the said talkies to another firm styled as "Oriental Theatres". Two agreements were executed between the parties, one covered for movable assets dt. 27th Dec., 1960, and the other dt. 28th Dec., 1960, regarding immovable assets. In the assessment year in question, viz., for 1962-63, the assessee filed a nil return. However, the ITO worked out the difference in value on the basis of the written down value and the consideration mentioned in the agreement and concluded that it made profits under s. 41(2) in a sum of Rs. 37,066 and capital gain of Rs. 46,363. The assessee went in appeal before the AAC, but was unsuccessful. On appeal before the Tribunal, the Tribunal came to the conclusion that the items mentioned in the agreement dt. 27th Dec., 1960, though described as movables were in fact immovable properties and as the AAC did not consider this aspect, remanded the matter to the AAC. On remand, the AAC held that there was no profit or gain under s. 41(2) of the IT Act. This finding of the AAC was confirmed by the Tribunal on further appeal by the Revenue and it was held that there was no transfer of immovable property under a registered document, therefore, there was no sale and no income under s. 41(2) of the Act or no capital gains accrued to the assessee by the said transaction. On those facts, the above said question is referred to us.

(3.) We have gone through the list of items. The discussion takes us to the question as to when chattels are said to be "immovable properties". The expression "immovable property" is defined in s. 3 of the Transfer of Property Act in the following terms :