- (1.) BY the Court On an application filed under section 256(1) of the Income Tax Act, 1961, the Tribunal has referred the following question for the opinion of this court : 'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no actual transfer, there being no document in support of the alleged transfer of immovable property to M/s. Hindustan Safety Glass Works, Ltd. Jaipur, as a going. concern ?' 'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no justification for charging capital gains as well as profit under section 41(2) of the Income Tax Act, 1961 ?'
(2.) THE assessee is a firm which was carrying on business of manufacture and sale of wind screen glass for automobiles and toughened glass. The business and the factory was leased out to Auto Glass Industries which lease was also terminated in the accounting year relevant to assessment year 1979 -80. The relevant assessment year in hand is 1980 -81. For the year under review there was no manufacturing operation at all. The assessee had entered into financial arrangement with Rajasthan Financial Corporation (RFC) by means of a mortgage deed dated 3 -6 -1971, and received a sum of Rs. 4,60,000 as loan. The property which was mortgaged includes land and the factory building and also various machineries. On the examination of the records Income Tax Officer found that factory building along with machinery were agreed to be sold to M/s. Safety Glass Works Ltd. for a total cost of Rs. 24.5 lacs through R.F.C. vide agreement of sale dated 25 -9 -1979, and possession was also given to the party concerned. Before assessing officer, assessee submits that for immovable property transfer could be effected only by means of registered deed which is yet to be affected and, therefore, in view of the provisions contained in section 54 of Transfer of Property Act, the property cannot be said to have been transferred and when the property has not been transferred, there is no question of taxing any profit arising in the year under consideration. Income Tax Officer did not accept this. According to the Income Tax Officer, the agreement has been entered into for sale through the R.F.C and purchaser clearly showed that the assessee has no role to play at all. The agreement between R.F.C and purchaser in on was in the nature of higher purchase, therefore, assessee is liable to pay the capital gain tax. The assessing officer has arrived at an amount of Rs. 5,03,282 as capital gain on the sale of machinery and from that deduction under section 80 -I was granted to the tune of Rs. 2,04,313.
(3.) IN appeal before the Commissioner (Appeals), the Commissioner (Appeals) has observed that there was no actual transfer, therefore, there is no question of charging profit under section 41(2) or the capital gains. The view taken by the Commissioner (Appeals) has been upheld by the Tribunal.;