COMMISSIONER OF INCOME TAX, MADRAS vs M/S. MADURAI MILLS CO. LIMITED

The Supreme Court held that the distribution of assets by liquidators during the voluntary liquidation of a company does not constitute a sale, exchange, relinquishment, or transfer under Section 12B of the Income-tax Act, 1922. The Court emphasized that shareholders receive assets in satisfaction of their rights as shareholders, not through a transaction that attracts capital gains tax. Consequently, the assessee company was not liable to pay tax on the surplus amount of Rs. 95,944/- as it did not arise from a taxable event under the statute.