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Issues involved:
The issue involves the interpretation of whether the profit arising from the transfer of an import license attracts capital gains tax u/s 256(1) of the Income-tax Act, 1961. Summary: The case involved a dispute regarding the applicability of capital gains tax on the profit of Rs. 67,125 derived from the transfer of an import license by the assessee to a third party. The assessee contended that no capital gain was involved in the transfer as there was no cost in terms of money in its creation or acquisition. The Tribunal found that the import entitlement was acquired without any cost to the assessee and relied on previous court decisions to support its conclusion. The Tribunal's decision was challenged by the Commissioner of Income-tax, leading to a reference to the High Court. The High Court noted that the Tribunal had found no evidence of any cost in terms of money involved in the assessee securing the import license. Referring to a previous court decision, the High Court emphasized that capital gains tax applies only when an asset has cost the assessee something in terms of money. The court rejected the revenue's argument that the previous decision applied only to certain types of assets like goodwill, copyright, and trademark, stating that the principle applied to all capital assets. Therefore, the High Court ruled in favor of the assessee, holding that the profit from the transfer of the import license did not attract capital gains tax. In conclusion, the High Court answered the question referred to it in the affirmative and in favor of the assessee, with no order as to costs.
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