COMMISSIONER OF INCOME TAX, HYDERABAD vs M/S. MOTOR AND GENERAL STORES (P.) LTD.

The Supreme Court held that the transaction in question was one of exchange rather than sale, thus not subject to taxation under Section 10(2)(vii) of the Income-tax Act, 1922. The Court emphasized that the substance of the transaction must be considered over its form, and since no price was paid for the transfer of properties, but rather shares were exchanged, the Income-tax authorities were incorrect in treating it as a sale. The High Court's ruling in favor of the respondent was upheld, confirming that the operative language of the exchange deed dictated the legal effect of the transaction.