PNB FINANCE LTD. vs COMMISSIONER OF INCOME TAX-I, NEW DELHI

The Supreme Court addressed the issue of whether the transfer of a banking undertaking resulted in taxable capital gains under Section 45 of the Income Tax Act, 1961. The Court held that the full value of consideration received, amounting to Rs. 10.20 crores, was chargeable to tax in the assessment year 1970-71. It clarified that the computation of capital gains must adhere to the provisions of Section 48, which were applicable at the time, and emphasized that the option to substitute fair market value under Section 55(2)(i) could only be exercised if both original cost and fair market value figures were available.