# Sri Kannan Rice Mills Ltd v. Commissioner of Income-tax

- **Citation:** [1960] 3 S.C.R. 167
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Bench:** S. K. Das, J. L. Kapur, M. Hidayatullah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sri-kannan-rice-mills-ltd-v-commissioner-of-income-tax-1828
- **Pages:** 11

## Headnote

Income-tax-Distribution of capital assets-Whether distribution
mu.st be in specie-Sale of capital assets by administrator for distribution amongst legatees-Profit on such sales, if amounts to capital
gains liable to tax-Income-tax Act, r922 (XI of r922), s. I2B(I),
third proviso.
The appellant was the administrator of the estate of one
Henry Gannon, a resident of British India, who left for the
~ ·
United Kingdom in 1944 and died there in 1945· In the course
of administration the appellant sold certain shares and securities
belonging to the deceased for the purpose of distributing the
assets amongst the legatees and thereby realised more than their
cost price. The excess of sale price over the cost price was
· treated by the Income-tax Officer as capital gain under s. 12B
March 4
.
168
SUPREME COURT REPORTS
[1960]
•960
of the Income-tax Act and the appellant was assessed to tax on
such capital gain for the assessment years r947-48 and r948-49 .
.fames Anderson The appellant contended that there had been a distribution of
v.
capital assets by him under the will of Henry Gannon and thereCommissioner of fore he came under the protection of the third proviso to s. r2B(r)
Inc:ime-tax, Bombay and was not liable to tax.
Heid, that the appellant was not protected by the third
proviso to s. 12B(1) as the expression "distribution of capital
assets" in that proviso meant distribution in specie and not
distribution of sale proceeds of the capital assets. So long as
there was distribution of the capital assets in specie and there
was no sale, there was no transfer for the purposes of s. r2B, but
as soon as there was a sale of the capital assets and profits or
gains arose therefrom, the liability to tax also arose, whether the
sale was by the administrator or by the legatee.
Sri Kannan Rice Mills Ltd. v. Commissioner of Income-tax,
Madras, (r954) 26 I.T.R. 35r; Commissioner of Income-tax, Bombay North v. Walji Damji, (r955) 28 I.T.R. 9r4 and Gowri Tile
Works v. Commissioner of Income-tax, Madras, (r957) 3r I.T.R.
250, referred to.
CrvIL APPELLATE JURISDICTION:
Civil
Appeal
No. 335 ofl956.
Appeal by special leave from the judgment and
order dated August 25, 1954, of the Bombay High
Court in Income-tax Reference No. l of 1954.
N. A. Palkhivala, S. N. Andley, and J. B. Dadachanji, for the appellant.
K. N. Rajagopal Sastri and D. Gupta, for the respondent.
1960. March, 4. The Judgment of the Court was
delivered by
s. K. Das J.
S. K. DAS, J.-This appeal by special leave is from
the decision of the Bombay High Court dated August 25,
1954', in Income-tax Reference No. 1 of 1954. The
only question which falls for decision in the appeal is
the true scope and effect of the third proviso to old
S. 12B(l) of the Indian Income Tax Act, hereinafter
referred to as the Act.
The facts relevant to the appeal are these : one
Henry Gannon was a resident of British India, who
used to be assessed to income-tax under the Incometax law of this country. He left India in 1944 for the
United Kingdom where he died on May 13, 1945. He
left a will dated November 18, 1942 by which the
National Bank of India Ltd., in London was appointed
Executor of his estate. Ou October 1, 1945, probate
~- ....
...
··-..
. ,,
-
3 S.C.R. SUPREME COURT REPORTS
169
of the will was granted to the said Bank by 'a Court
z96o
of competent jurisdiction in the United Kingdom. 1
A d
On October 25, 1945, a power of attorney was given
am•s v n erson
by the Bank to James Anderson, who is now the commis;ioner of
appellant before us. He made an application to the Ino.-ta,,, Bombay
High Court of Bombay under ·s. 241 of the Indian
Succession Act and on that application obtained
s. K. Das J.
Letters of Administration with a copy of the will
annexed. In the course of administration of the
estate of Henry Gannon, the appellant sold certain
shares and securities belonging' to the deceased for the
purpose of distributing the assets amongst the legatees.
The sale of these shares and securities realised more

## Text

3 S.C.R. SUPREME COURT REPORTS
167
ously be decided on a fair and reasonable construction
r960
of s. 19(6) itself, and the rule in question, even if
Associated
applicable would not be material in that behalf. We Cement companies
accordingly hold that, on a fair and reasonable
Ltd.
construction of s. 19(6), the true position is that,
v.
though the expression "any party bound by the Their Workmen
award" refers to all workmen bound by the award, G . d-dk 1
,
.
h
'd
d
b
.
a;en raga
ar .
notice to termmate t e sa1
awar
can e given not
·
by an individual workman but by a group of workmen acting collectively either through their union or
otherwise, and it is not necessary that such a group
or the union through which it acts should represent
the majority of workmen bound by the award.
In the result the appeal fails and is dismissed with
costs.
Appeal dismissed.
JAMES ANDERSON, ADMINISTRATOR OF
THE ESTATE OF THE
LATE HENRY GANNON, BOMBAY
.
.
v .
THE COMMISSIONER OF INCOME-TAX,
BOMBAY
(S. K. DAS, J. L. KAPUR AND
M. HIDAYATULLAH, JJ.)
Income-tax-Distribution of capital assets-Whether distribution
mu.st be in specie-Sale of capital assets by administrator for distribution amongst legatees-Profit on such sales, if amounts to capital
gains liable to tax-Income-tax Act, r922 (XI of r922), s. I2B(I),
third proviso.
The appellant was the administrator of the estate of one
Henry Gannon, a resident of British India, who left for the
~ ·
United Kingdom in 1944 and died there in 1945· In the course
of administration the appellant sold certain shares and securities
belonging to the deceased for the purpose of distributing the
assets amongst the legatees and thereby realised more than their
cost price. The excess of sale price over the cost price was
· treated by the Income-tax Officer as capital gain under s. 12B
March 4
.
168
SUPREME COURT REPORTS
[1960]
•960
of the Income-tax Act and the appellant was assessed to tax on
such capital gain for the assessment years r947-48 and r948-49 .
.fames Anderson The appellant contended that there had been a distribution of
v.
capital assets by him under the will of Henry Gannon and thereCommissioner of fore he came under the protection of the third proviso to s. r2B(r)
Inc:ime-tax, Bombay and was not liable to tax.
Heid, that the appellant was not protected by the third
proviso to s. 12B(1) as the expression "distribution of capital
assets" in that proviso meant distribution in specie and not
distribution of sale proceeds of the capital assets. So long as
there was distribution of the capital assets in specie and there
was no sale, there was no transfer for the purposes of s. r2B, but
as soon as there was a sale of the capital assets and profits or
gains arose therefrom, the liability to tax also arose, whether the
sale was by the administrator or by the legatee.
Sri Kannan Rice Mills Ltd. v. Commissioner of Income-tax,
Madras, (r954) 26 I.T.R. 35r; Commissioner of Income-tax, Bombay North v. Walji Damji, (r955) 28 I.T.R. 9r4 and Gowri Tile
Works v. Commissioner of Income-tax, Madras, (r957) 3r I.T.R.
250, referred to.
CrvIL APPELLATE JURISDICTION:
Civil
Appeal
No. 335 ofl956.
Appeal by special leave from the judgment and
order dated August 25, 1954, of the Bombay High
Court in Income-tax Reference No. l of 1954.
N. A. Palkhivala, S. N. Andley, and J. B. Dadachanji, for the appellant.
K. N. Rajagopal Sastri and D. Gupta, for the respondent.
1960. March, 4. The Judgment of the Court was
delivered by
s. K. Das J.
S. K. DAS, J.-This appeal by special leave is from
the decision of the Bombay High Court dated August 25,
1954', in Income-tax Reference No. 1 of 1954. The
only question which falls for decision in the appeal is
the true scope and effect of the third proviso to old
S. 12B(l) of the Indian Income Tax Act, hereinafter
referred to as the Act.
The facts relevant to the appeal are these : one
Henry Gannon was a resident of British India, who
used to be assessed to income-tax under the Incometax law of this country. He left India in 1944 for the
United Kingdom where he died on May 13, 1945. He
left a will dated November 18, 1942 by which the
National Bank of India Ltd., in London was appointed
Executor of his estate. Ou October 1, 1945, probate
~- ....
...
··-..
. ,,
-
3 S.C.R. SUPREME COURT REPORTS
169
of the will was granted to the said Bank by 'a Court
z96o
of competent jurisdiction in the United Kingdom. 1
A d
On October 25, 1945, a power of attorney was given
am•s v n erson
by the Bank to James Anderson, who is now the commis;ioner of
appellant before us. He made an application to the Ino.-ta,,, Bombay
High Court of Bombay under ·s. 241 of the Indian
Succession Act and on that application obtained
s. K. Das J.
Letters of Administration with a copy of the will
annexed. In the course of administration of the
estate of Henry Gannon, the appellant sold certain
shares and securities belonging' to the deceased for the
purpose of distributing the assets amongst the legatees.
The sale of these shares and securities realised more
than their cost Pl'.ioe. The excess of the sale price
over the cost price was treated by the Income Tax
Officer as capital gain under s. 12B of the Income Tax
Act. For the assessment year 1947-48 the capital
gain was computed by the Income Tax Officer at
Rs. 20,13,738 and for the assessment year 1948-49 at
Rs. 1,51,963. These amounts of capital gain were
brought to tax for the assessment year 194 7-48 and
1948-49 along with certain dividend and interest
inc@me which had accrued or had been received in
the relevant years of account. Not satisfied with
these assessments, the appellant preferred two appeals
to the Appellate Tribunal, Bombay. These two appeals
were consolidated. -The appellant urged three points
in support of his contention that the assessments were
invalid: firstly, that s. 12B imposing a tax on capital
gains was ultra vires the Government of India Act,
1935; secondly, that under s. 24B of the Act, the
appellant was only liable to pay tax which the testator
would have been liable to pay and as these capital
assets were not sold by the testator, there was no
liability upon the appellant: and thirdly, that the sale
of the shares and securities by the appellant under the
will of Henry Gannon came within the purview of the
third proviso to s. 12B(l) and, therefore, was not to
be treated as a sale of capital assets under s. 12B(l).
The Appellate Tribunal repelled the first two contentions, but accepted the third as correct and in that
view allowed the two appeals in part. It directed the
Income Tax Officer to delete from the assessed income
22
•
•
170
SUPREME COURT REPORTS
[1960]
z96o
the capital gains made by the sale of shares and
J
A ,
securities. The Commissioner of Income-tax, Bombay
ames
nr.i.erson
C"
.
v.
1ty, then moved the Appellate Tribunal to refer to
Commissioner of the High Court of Bombay the question which arose
Inc.-tax, Bombay out of the third contention, na~ely, tbe true scope
and effect of the third proviso t,o old s. 12B(l) of the
5· K. Das J,
Act.
The Appellate Tribunal thereupon referred the
following question of law to the Bombay High Court:
"Whether the sale of the shares and securities by
the administrator of the estate of late Mr. Gannon
is not a sale for the• purpose of Section 12B(l) in
view of the third proviso to section 12B(l) of the
Indian Income Tax Act."
At the instance of the assessee the other two questions which were decided against him were also
referred to the High Court. The High Court of Bombay considered all the three questions in Income-tax
Reference No. 1 of 1954 and by its decision appealed
from answered all the three questions against the
assessee. The appellant then moved this Court for
special leave which "was granted on October 7, 1955.
The question whether the levy of capital gains under
section 12B is ultra vires no longer survives by reason
of the decision of this Court in N avinchandra M afatlal v. Commissioner of Income-tax(').
This question
was not therefore pressed before. us. The question
under s. 24B was also not seriously pressed. The
view of the Bombay High Court that s. 24B does not
limit the liability of the Administrator or Executor to
the cases referred to under that section is correct;
because the appellant is as much an assessee under
the Act as any other individual and ifhe makes capital
gains, he is as much liable to pay tax as any other
individual. This position has not been seriously
contested before us.
·
We are, therefore, left only with the question which
turns on the true scope and effect of the third proviso
to old s. 12B(l) of the Act. Capital gains were charged
for the first time by the Income-tax and Excess Profits
Tax (Amendment) Act, 1947, which inserted s. 12B in
the Act. It taxed capital gains arising after March 31,
1946. The levy was virtually abolished by the Indian
(I) [1954) 26 I.T.R. 758; [1955) 1. S.C.R. 829.
-
...
..
-
\
.... -,-Jo
3 S.C.R. SUPREME COURT REPORTS
171
Finance Act, 1949, which confined the operation of
I960
the ~ection to ?~pital ~ains arising before ~pril l, 1948; James Anderson
but it was revived with effect from April 1, 1957, by
· v..
·
the Finance {No. 3) Act, 1956, which substituted the Co111missione1 of
present 3ection. We are concerned in this appeal Ino.-tax, Bo111baJ.
with the old section. That section, leaving out those
parts which are not relevant for our purposes, ran as
S.K Das f ..
follows:
"S. 12B Capital gains-(1) The tax shall be payable by an assessee under the head "capital gains"
in respect of any profits or gains arising from the
sale, exchange or transfer of a capital asset effected
after the 31st day of March, 1946, and. before the
1st day of April, 1948; and such profits and gains
shall be deemed to be income of the previous year
in which the sale, exchange or transfer took place:
'
..................................................................................
. Provided further that any transfer of capital
assets by reason of the compulsory acquisition thereof under any law for the time being in force relating
to the compulsory acquisition of property for public
purposes or any distribution of capital assets, on the
total or partial partition of a Hindu undivided
family, or on the dissolution of a firm or other
association of persons, or on the liquidation of a
company, or under a deed of gift, bequest, will OT
transfer on irrevocable trust shall not, for the purposes of this section, be treated as sale, ex9hange or
transfer of the capital assets:
(2) The amount of a capital gain shall be computed after making the following deductions from the
full values of the consideration for which the sale,
exchange or transfer of the capital asset is made,
namely:-
(i) expenditure incurred solely in connection with
such sale, exchange or transfer;
(ii) the actual cost to the assessee of the capita 1 ·
asset, including any expenditure of a capital nature
incurred and borne by him in making any additions
or altera.tiop.s thereto but excluding any expenditure
James Anderson
v.
Commissioner of
ln&.-tax, Bombay
S. K. Das].
•
172
SUPRElVIE COURT REPORTS
[1960]
in respect of which any allowance is admissible
under any provisions of sections 8, 9, 10 and 12.
(3) Where any capital asset became the property
of the assessee by succession, inheritance or devolution or under any of the circumstances referred to
in the third proviso to sub-section (1), its actual cost
allowable to him for the purposes of this section
shall be its actual cost to the previous owner thereof and the provisions of sub-section (2) shall apply
accordingly ; and where the actual cost to the previous owner cannot be ascertained, the fair market
value at the date on which the capital asset became
the property of the previous owner shall be deemed
to be the actual cost thereof. "
"Capital asset" is defined in s. 2(4A) of the Act, and
it was not disputed before us that the shares and
securities which the appellant sold constituted capital
asset within the meaning of that definition. We may
shortly state here the scheme of sub-ss. (1), (2) and (3)
of s. 12B of the Act. Sub-section (1) is the substantive provision which levies a tax in respect of profits
or gains arising from the sale, exchange or transfer of
a capital asset effected during a specified period. The
admitted position in this case is that the appellant
sold the shares and securities, which constituted capital asset, within that period and thus clearly came
within sub-s. (1) of s.12B. Sub-s. (2) states how the
amount of capital gain shall be computed, and it
allows certain deductions from the full value of the
consideration for which the sale, exchange or transfer
of capital assets is made. As nothing turns upon the
deductions allowed under sub-s. (2), we need not refer
to them. Sub-section (3) refers to a capital asset which
became the property of the assessee by succession,
inheritance or devolution or under any of the circumstances referred to in the third proviso to sub-s. (1),
and states what deductions the assessee is then entitled to. In one case, the assessee may be the administrator or executor who has himself sold the capital
\
J
-
. .,
...
-
3 S.C.R. SUPREME COURT REPORTS
173
assets ; in another case the assessee may be the person
r960
who has got the capital assets by· succession etc. or
-
under any of the circumstances referred to in the Jam~s Anderson
third proviso to sub-s. (1), and if in the latter case the Commi;;ioner of
assessee sells the capital assets, he brings himselfwith- Inc.-tax, Bombay
in sub-s. (1) but· is entitled to a deduction of the actual
cost to the previous owner in accordance with the
s. K. Das J.
provisions of sub-s. (2); where, however, the actual
cost to the previous owner cannot be determined, he
is entitled to a deduction of the fair market value at
the date on which the capital assets became the property of the previous owner. This in effect is the
scheme of the three sub-sections. Manifestly, the
intention of the legislature is to tax the profits made
by the sale, exchange or transfer of capital assets
and . the incidence of the taxation falls at the
time of the transfer. If the sale is made by
the administrator or executor, the liability under
sub-s. (1) falls on him; if, however, the sale is made
by a person who got the capitalassets inter alia in any
of the ways mentioned in sub-s. (3), he becomes liable
to tax as and when he sells the capital assets and makes
profits therefrom. Now, the question is what bearing
the third proviso to sub-s. (1) has on the aforesaid
scheme.
This proviso states in effect that under certain circumstances mentioned therein a transfer of
capital assets shall not be treated as a. transfer for the
purposes of the section. The circumstances enumerated are: (a) compulsory acquisition of property for
public purposes, (b) distribution of oapital assets on
the total or partial partition of a Hindu undivided
family, (o) distribution of capital assets on the dissolution of a firm or other association of persons, or
on the liqaidation of a company, and (d) distribution
of capital assets under a deed of gift,. bequest, will or
transfer on irrevocable trust. In the present case we
are concerned with the question whether there has
been a distribution of capital assets by the appellant
under a will so as to bring him within the ambit of the
third proviso. If the appellant comes within that
ambit, then th_e sales which he made of the shares and
securities will not be treated as transfer within the
meaning of sub-s. (1).
The contention of the appellant
174
SUPREME COURT REPORTS
[1S80]
r96o
is that there has been a distribution of capital assets
by him under the "Viii of Henry Gannon and therefore
James Anderson h
d
h
v.
e comes un er t e protection of the third proviso.
Commissioner of The High Court took the view that the expression
Ino..tax, Bombay "distribution of capital assets" in the third proviso
can only mean such distribution in specie; it cannot
s. K. Das J.
and does not mean distribution of the sale proceeds of
the capital assets. The High Court, therefore, held
that the appellant did not come within the protection
of the third proviso, as he did not distribute the
ca pita! assets in specie.
On behalf of the appellant it has been contended
before us that the High Court came to an erroneous
conclusion with regard to the scope and effect of the
third proviso. Mr. N. A. Palkhivala who has argued
the case on behalf of the appellant has put his argument in the following way. He has submitted that
normally the purpose of a proviso is to carve out an
exception from the substantive provision. Sub-section
(1) of s. 12B, which is the substantive provision,
imposes the liability to tax on an assessee in respect
of profits or gains arising from the sale, exchange or
transfer of a capital asset. Leaving out the case of
compulsory acquisition of property for public purposes
which may result in capital gains, Mr. Palkhivala has
submitted that the other cases earlier .enumerated as
(b), (c) and (d) in the proviso caμnot result in any
capital gains by a mere distribution in specie ; because
on a distribution in specie upon a partition or upon a
testamentary gift or gift inter vivos, no capital gain
can possibly be made by the person who owned the
assets before the distribution and who alone can be
liable to tax under the section. If, therefore, the correct
interpretation of the third proviso is distribution of
ca pita! assets in specie, the proviso.'. does not serve any
-purpose.
Therefore, Mr. Palkhivala has argued that
the expression " distribution of ca pita! assets " must
be given a meaning which will fulfil a purpose and
correlate the proviso to the substantive provision in
sub-s. (1).
That meaning, according to him, is distribution of sale proceeds of capital assets.
We are unable to accept the argument as correct.
Firstly, having regard to the definition of the expres-
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• y
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·..... .
•·
3 S.C.R.
SUPREME COURT REPORTS
175
sion "capital assets" it· would be wrong to read
I960
"distribution of eapital asset~" as meaning "di~tribu~ James Anderson
tion of sale proceeds of capital assets". Obv10usly,
v.
there is a clear and vjtal distinction between "capiCommissioner of
tal assets" and their "sale proceeds". If capital Inc.-tax, Bombay
assets are sold first and a distr:ibution of the sale
proceeds is made afterwards, then the sale precedes diss. K. Das .I·
tribution and what is distl'ibuted is not capital assets
but the sale proceeds thereof. Secondly, we do not agree
that the third proviso serves no purpose if the expression "distribution of capital assets" is given its
o
natural and plain meaning, viz. distribution in specie.
The High Court expressed the view that by the
proviso the legislature might have intended to protect
an assessee from a possible argument by the Revenue
that when (to take an example appropriate to the
case) an executor or administrator transferred the
-estate or part of the estate to the person entitled to it,
there was a transfer within the meaning of sub-s. (1)
of s. 12B. To us it seems that the purpose of the
proviso is abundantly clear ifthe scheme of sub-ss. (1),
(2) and (3) is kept in mind. Assume that there is a
distribution of capital assets in specie amongst the
legatees, and one of the legatees sells the capital assets
which he got in one of the ways mentioned in the
third proviso ; he at once becomes liable to tax on the
profits made on· the sale. Sub-section (3) makes that
position clear and if the proviso is read in the context
of the substantive provisions o~ s. 12B its purpose is
quite clear. The purpose is this: aB long as there is
distributfon of the capital assets in specie and no sale,
there is no transfer for the purposes of the section ;
but as soon as there is a sale of the capital assets and
profits or gains arise therefrom, the liability to tax
arises, whether the sale be by the administrator or
the legatee. It is significant that the proviso uses the
words " for the purposes of this section " . and not
merely sub-s. (1). Indeed, Mr. Palkhivala was forced
to concede that in view of the provisions of sub-s. (3)
of s. 12B, the expression "distribution of capital
assets" ·must also mean distribution in specie because
under sub-s. (3) it is the· capital asset which becomes
the property of the assessee under any of the circum-
176
SUPREME COURT REPORTS
[1960)
z960
stances mentio11ed in the third proviso. He then
contended that the expression meant both distribution
James Anderson in specie and distribution of sale proceeds.
We do
C
.v".
·' not see why an unnatural or forced meauing should
ommissioner o1 b
.
h
.
h
b
. .
h
lno.-tax. Bombay
e gtven to t e expression, w en y g1vmg t e expres-
-
sion its plain and natural meaning the third proviso
s. K. Das J.
fits in with the scheme of sub-ss. (1), (2) and (3) of
s. 12B of the Act. It is necessary to point out here
that on the interpretation sought to be placed on the
third proviso on behalf of the appellant, the adminiso
trator will escape paying tax if he sells the capital
assets; but the legatee will not escape if he sells the
capital assets after having received them in specie
from the administrator. This is an anomaly which is
against the scheme of s. 12B of the Act.
We are
accordingly of the view that the High Court rightly
held that the expression "distribution of capital
assets" in the third 11roviso to sub-s. (1) of s. 12B of
the Act means distribution in specie and not distribution of sale proceeds.
In the High Court an alternative argument was also
presented on behalf of the assessee to the effect that
the third proviso contemplated involuntary transfers.
This argument was based on the use of the expression
' by reason of' in the proviso, and the proviso was
sought- to be read as follows (omitting words not
relevant to the case) :
"Provided further that any transfer of capital
assets by reason of any distribution of capital assets
under a ........................................ will .............. .
. . . . . . . . . . .. . . . . . . . . . . . . shall not for the purposes of this
. section be treated as sale, exchange or transfer of
the capital assets."
·The argument was that inasmuch as the administrator sold the shares and securities for the purpose
of distributing the sale proceeds to the legatees, the
sale was involuntary and was necessitated ' by reason
of' the terms of the will; therefore, he was protected
under the third proviso. The High Court repelled
this argument and for good reasons. Firstly, the
question whether the sale was voluntary or involuntary is not germane to the scheme of section 12B.
Secondly, on a proper reading of the proviso, the
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·•
-·
3 S.O.R.- SUPREME COURT REPORTS
177
.... 4 - expression 'by reason of' goes with the clause relatz96o
ing to compulsory acquisition of property and not James Anderson
with the distribution of capital assets.
The position seems to us to be so clear that it is unCommi';;ioner of
necessary to labour it or to refer to decided cases. Inc.-tax, Bombay
Such decisions of the High Courts as have been
--
brought to our notice are all one way and they take
s. K. Das J.
the same view as was taken by the High Gourt in the
decision.under appeal (see Sri Kannan Rir,e Mills Ltd.
v. Commissioner of Income-tax, Madras (1); Commissioner of Income-tax, Bombay North v. Walji Damji (2);
and Gowri Tile Works v. Commissioner of· income-tax,
Madras (3).
For the reasons given above, we see no merit in the
appeal and we dismiss it with costs.
Appea:l dismissed.
THE PARBHANI TRANSPORT CO-OPERATIVE
SOCIETY LTD.
v.
THE REGIONAL TRANSPORT AUTHORITY,
AURANGABAD AND OTHERS
(B. P. SINHA, c. J., JAFER IMAM, A. K. SARKAR,
K. N. W ANCHOO AND J. 0. SHAH, JJ.)
Motor Vehicles-Grant of stage carriage permit to Government
under Ch. IV-Constitutional validity--Motor Vehicles Act, I939
(4 of I9J9), as amended by Act IOO of I956, ch. IV. ss. 42, 47, ch,
IV A, s. 68F(I)-Constitution of India, Arts. I9(L)(g), I4.
The petitioner, a registered co-operative societ;r, carrying
on the business of plying motor buses as stage carriages, had
permits for four routes which were due to expire. The State
applied for permits for all these routes under Ch. IV of the
Motor Vehicles Act, 1939, as amended by Act roo of 1956, and
the petitioner applied for renewal of its own permits. The
Regional Transport Authority rejected the petitioner's applications and granted those of the State. The petitioner's appeal to
the State Transport Authority was rejected. But the High
Court quashed the said orders under Art. 226 and directed a
(I) [1954] 26 I.T.R. 3.~I.
(.?) (1955] 28 I.T.R. 914.
(3) [I9,57] 3I I. T.R. 250.
2J
z960
Match 7
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