COMMISSIONER OF INCOME TAX Vs. A J ELDER

JUDGEMENT

(1.) TAKEN by itself the question referred in this case is one of an ordinary kind, turning, as it does, merely on the construction of two deeds. But the facts are rather out of the ordinary.

(2.) IT appears that the two assessees made use of the liberty which the law allowed them so to adjust their affairs as to minimise their tax liability and they made an attempt to transfer some capital assets in a way which might avert their liability for a tax on the capital gains made by them out of the transfer. The question is whether they succeeded.

(3.) THE second clause was a little more complicated. By the first clause the two transferors had parted with only fractions of their shares in the capital and goodwill of the firm. By the second clause Daniel Smith agreed to sell a further 15 per cent of his shares for a consideration of Rs. 1,83,625 and James Elder agreed to sell a further 10 per cent. for a consideration of Rs. 1,22,375. It was provided that the sale would take place on 1st April, 1948, and the consideration would have to be paid then.