COMMISSIONER OF INCOME TAX GUJARAT-II, AHMEDABAD, vs R.M. AMIN

The Supreme Court held that the Uganda company is not a company within the meaning of Section 2(17) of the Income Tax Act, 1961, and therefore, the distribution of assets during voluntary liquidation does not constitute a transfer liable to capital gains tax under Section 45. The Court emphasized that the distribution merely recognized existing legal rights rather than creating new ones, following the precedent set in Commissioner of Income-tax, Madras v. Madurai Mills Co. Ltd., 89 ITR 45. Consequently, the provisions of Section 46(2) do not apply, and the assessee is not liable for capital gains tax on the amount received from the liquidation.