JAMES ANDERSON, ADMINISTRATOR OFTHE ESTATE OF THELATE HENR vs THE COMMISSIONER OF INCOME-TAX,BOMBAY

The Supreme Court ruled that the term 'distribution of capital assets' in the third proviso to Section 12B(1) of the Income-tax Act, 1922, refers specifically to distribution in specie, not the distribution of sale proceeds. The appellant, who sold shares and securities of a deceased estate, was assessed for capital gains tax on the profits from these sales. The Court held that since there was a sale of capital assets, the appellant was liable for tax on the capital gains realized, thus affirming the assessment made by the Income-tax Officer.