THE COMMISSIONER OF INCOME-TAX, BOMBAY vs THE PROVIDENT INVESTMENT CO., LTD.

The Supreme Court held that the transaction involving the relinquishment of the managing agency did not constitute a sale or transfer under Section 12B of the Indian Income-tax Act, 1922. The Court found that the letters exchanged between the parties indicated an agreement to sell shares along with the managing agency, but the subsequent letter modified this to a relinquishment of the managing agency, thus changing the nature of the transaction. Consequently, the Court upheld the High Court's ruling that there were no capital gains arising from the transaction.