CASES ON CAPITAL GAINS

1. Navin Chandra Mafatlal v. C.I.T. (1955) 27 ITR 245 (SC)

The appellant was assessed by the Income-tax Officer, Bombay for the capital gains that
was earned by the appellant in the following circumstances. The assessee had a half
share in certain immovable properties situate in Bombay which were sold by the
assessee and his coowners during the relevant accounting year to a private limited
company known as Mafatlal Gagalbhai & Company Ltd. The profits on the sale of the
said properties amounted to Rs. 18,76,023 and the appellants half share therein came to
the sum of Rs. 9,38,011 which was included in the assessment under section 12-B

In this case, the constitutional validity of the provisions (section 12 b) of the Act relating to
taxability of capital gains was challenged. The Supreme Court while upholding the competence
of parliament in legislating with regard to capital gains as part of income, observed that the term
income should be given the widest connotation so as to include capital gains within its scope.

On the question as to whether Capital Gains being a capital receipt can be brought to tax as
income. It may be noted that the ordinary accounting canons of distinctions between a capital
receipt and a revenue receipt are not always followed under the Income-tax Act. Section
2(24)(vi) of the Income-tax Act specifically provides that Income includes any capital gains
chargeable under Section 45(1). It may not be out of place to mention here that in the absence
of a specific provision in Section 2(24) capital gains have no logic to be taxed as income.

2. C.I.T. v. Krishna Warrier (1964) 53 ITR 176 (SC)

Can business interest in an entity amount to property?

In this case, a person had created a trust of his properties and the question was whether the
business could be included as part of the trust as property.
The court held that property is a term of widest importance and subject to any limitation which
the context may require, it signifies every possible interest which a person can hold and enjoy.
Even business interest would be brought within the term property. The words property of any
kind, are words of widest amplitude.

They exclude any limitation which may be sought to be introduced for the purpose of restricting
the applicability of the definition. The adverbial clause whether or not connected with his
business or profession also emphasizes the width and amplitude of the definition. Every kind of
property held by an assessee, whatever be its nature or character, is within the connotation of the
expression capital asset provided, of course, it does not fall within the excepted categories
specified in clauses (i) to (vi).

3. CIT v. Rasiklal Maneklal (HUF) [1974] 95 ITR 656 (Bom.)

Whether there can be charge of capital gains on the amalgamation of companies where shares of
the old company were exchanged for shares of the new amalgamated company, could there be
charge of capital gains tax?

The Tribunal held that having regard to the scheme of amalgamation between the assessee and
another company, no sum could be assessed in the hands of the assessee as no capital gains had
accrued to it by exchange or relinquishment

4. In re Amiantit International Holdings (2010) 322 ITR 678 (AAR)

In case of transfer of shares during bankruptcy proceedings can there be charge of capital gains?

The valuation of shares being transferred from one subsidiary to another during a restructuring
exercise would not give rise to any monetarily convertible benefit. As there was no quid pro quo
and no consideration was given or received. On these grounds, it was held that there was no
taxable capital gains.

CIT v. Bharti Engineering Company

https://indiankanoon.org/doc/1716862/
whether transfer can be effected by mere entries in the books of the firm

CIT V. Jaipuria