HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
James Anderson, Administrator of the Estate of the Late Henry Gannon v. Commissioner of Income-tax, Bombay
Civil Appeal No. 335 of 1956
[1960] 3 SCR 167 ·
Indian Income-tax Act, 1922: section 12B(1) third proviso, 12B(3), 24B
Sources & disclosures includedDownload original judgment / order
3-judge bench · S. K. Das · J. L. Kapur · M. Hidayatullah
Assessment years: 1947-48, 1948-49
01 · Facts of the case
The administrator sold estate shares and securities to distribute proceeds to legatees. He claimed the old section 12B proviso for distribution under a will excluded the gains from tax.
Source: Primary report: SCR 168–170
02 · Discussion by the Hon’ble Court
The proviso covered distribution of capital assets in specie, not a preceding sale followed by distribution of cash proceeds. Read with subsections (1)–(3), tax attached when the administrator or later recipient sold the asset at a gain; inherited cost rules did not turn the sale into an exempt distribution.
Source: Primary report: SCR 171–177
03 · Judicial decision
Sales by the administrator were not protected by the proviso. Whether the sale was compelled by the will was immaterial; “by reason of” qualified the compulsory-acquisition clause.
Source: Primary report: SCR 175–177
04 · Outcome / in whose favour
The administrator’s appeal was dismissed with costs.
Source: Primary report: SCR 177
05 · AKHB REVIEW POINT
Keep transfer of the asset itself distinct from its realisation and later payment of proceeds. This applies the old 1946–1948 capital-gains scheme, and is distinct from the 1963 James Anderson legal-representative/deemed-dividend judgment already in the repository.
Source: Primary report: SCR 170–177
Source & verification
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Statutory scope
Historical legislation expressly identified in this note. This is not a decision under the Income-tax Act, 1961 or the Income-tax Act, 2025. Verify enacted wording, commencement, transition and subsequent judicial treatment independently before modern reliance.
Later treatment
Source checked 2026-10-23. Subsequent treatment and present-law applicability have not been comprehensively checked.
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