B.K.MEHTA, J. -
(1.)AS these two matters involve inter -dependent questions, it would be convenient to dispose them of by a single judgment and, therefore, we intend to deliver a common judgment in these two matters.
(2.)IN Special Civil Application No. 103 of 72, the petitioner -company is a private limited company having its registered office in Manekchowk, Ahmedabad. At present it is under liquidation and one Bharatkumar Chandulal Shah has been appointed its liquidator. In the assessment year 1968 -69, the relevant accounting year of which was ending on August 31, 1967, the company was resolved to be taken into voluntary liquidation. It appears that some of its assets were sold on June 15, 1967. The assets so disposed of were building and machinery, which were purchased by the petitioner -company before January 1, 1954. It is an admitted position that the petitioner -company had obtained depreciation on the said assets. Before the Income -tax Officer, Circle I, Ward E, Ahmedabad, in the course of the assessment proceedings, a question arose with regard to the levy of tax on capital gains. The petitioner -company claimed before the said Income -tax Officer that it should be permitted to substitute the market valuation of the machinery as on January 1, 1954, as the cost of acquisition for purposes of computation of capital gains. The said Income -tax Officer rejected the claim of the petitioner -company as he was of the opinion that the case of the petitioner -company was governed by section 50(1) of the Income -tax Act, 1961. At this stage it should be noted that the petitioner -company had purchased the machinery for a sum of Rs. 1,51,121 and the building for a sum of Rs. 1,48,455. The price realised by the petitioner -company on the sale of the said assets were Rs. 1,75,276 and Rs. 1,51,590, respectively. The Income -tax Officer, therefore, levied capital gains tax on the difference between the sale price and the written down value as adjusted under section 50(1) of the aforesaid Act. The claim of the petitioner -company was that, as the market price as on January 1, 1954, was Rs. 2,50,000 and Rs. 2,25,000 for machinery and building, respectively, the Income -tax Officer should take that as the cost of acquisition for purposes of ascertaining capital gains. The assessment order was passed by the said Income -tax Officer on March 10, 1969. Being aggrieved with this assessment order, the petitioner -company be his order of September 18, 1970. The petitioner -company, therefore, went in further appeal before the Income -tax Appellate Tribunal, Ahmedabad. The Tribunal also did not accept this contention of the petitioner -company on the plain reading of section 50 of the 1961 Act. It, therefore, by its order of January 16, 1971, dismissed the appeal. The petitioner -company had, therefore, sought a reference to this court and the Tribunal has referred the following question to us for our opinion :
'Whether, on the facts and circumstances of the case, the applicant was entitled to substitute the value as on January 1, 1954, as the cost of acquisition of the building and machinery ?'
By way of a greater caution, the petitioner -company has also filed the present Special Civil Application No. 103 of 1972 challenging the vires of the provisions contained in sections 45 and 55 and prayed for appropriate writ, orders and directions declaring the said provisions as unconstitutional, illegal and void as being violative of article 14 of the Constitution and also quashing and setting aside the orders of assessment as confirmed in the appeals.
(3.)THE aforesaid three orders of the Income -tax Officer, Appellate Assistant Commissioner and the Tribunal, are annexed to the petition as annexures 'A', 'B' and 'C', respectively.