The transfer of movable properties took place on the date when the limited company took possession of the properties, not on the date when the sale deed for the immovable properties was executed.

Ramaswami, J.

1. Legislation dealing with capital gain was first introduced in India by Section 6, Income-tax (Amendment) Act of 1947 (Act 22 of 1947). Sec.12B(1) which was newly enacted provided that

"in respect of any profit or gain arising in the sale, exchange or transfer of capital asset effected after 31-3-1946"

income-tax was payable by the assessee and

"such profits and gains shall be deemed to be income of the previous year in which sale, exchange or transfer took place."

The section was amended by virtue of Section 8, Finance Act of 1949 and the phrase "and before 1st April 1948" was added after the phrase "after 31st March 1946". The result therefore is that the assesses is liable to pay income-tax on capital gain in respect of the transfer of capital after 31-3-1946 and before 31-4-1948.

2. The assessee in this case is partnership called Messrs. Bhurangiya Coal Company. By an agreement dated 16-3-1946 the assessee agreed to transfer to a limited company, Bhurangiya Coal Co. Ltd. the properties described in Schedules 1 and 2 of the agreement consisting of all the movable and immovable properties appertaining to the colliery. The agreement was that the limited company would purchase from the assessee all the properties in Schedules 1 and 2 for a sum of Rs. 6,10,000. Out of this amount a sum of Rs. 2,00,600 was the price fixed for the immovable properties like coal land, buildings and structures included in Schedule 1 and a sum of Rs. 4,09,400 was the price of the movable properties like machinery, plants, tram lines and cables included in Schedule 2. The payment of the price was to be made by allotment of 50,000 shares of the value of Rs. 5,00,000 to the nominees of the vendors and the balance was to be paid in cash in equal shares to the two partnership firms Ramsarandas Brothers and D. R. Rathor.

The case of the assessee is that in pursuance of the agreement the limited company took possession of the colliery and of the properties mentioned in the two schedules on 30-3-1946. On the next day entries were made in the books of the limited company to show that the amount of Rs. 5 lacs was paid by adjusting 50,000 shares in the name of the vendees. The balance of the purchase price was actually paid by two cheques on 9-5-1946. It appears that a sale deed was registered on 17-5-1946, with respect to the immovable properties included in Schedule 1. in this state of facts the Income-tax officer held that the sale of both movable and immovable properties took place after 1-4-1946 and a sum of Rs. 4,71,757 was computed to be the capital gain of the assessee liable to be taxed, under Sec.12B(1), income-tax Act.

The decision of the Income-tax Officer was affirmed by Appellate Assistant Commissioner in appeal. The assessee took a further appeal to the Income-tax Appellate Tribunal who formed the opinion that so far as the movable properties were concerned the assessee gave possession to the limited company on 30-3-1946 and the transfer of title took place on that date. As regards immovables the Appellate Tribunal considered that the transfer took place on 17-5-1946 when the registration of the sale deed was effected and that the assessee was liable to pay income-tax on the profit made by sale of the immovables under Section 12B(1), Income-tax Act.

3. At the instance of the assessee the following question has been submitted by the Appellate Tribunal for the opinion of the High Court:

"Whether on the facts and circumstances of the case the transfer of movables took place on or before 31-3-1946, and as such any capital gain made by the assessee company on the sale of such movables is not liable to income-tax within the meaning of Sec.12B, Income-tax Act?"

4. In my opinion the question should be amended as follows in order to bring out the real controversy between the parties:

"Whether on the facts and circumstances of the case the transfer of properties in the second part of the schedule annexed to the agreement dated 16-3