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Issues:
Identification of the asset for capital gain/loss computation, interpretation of trust deed provisions, determination of market value as on 1-1-1954, existence of capital asset, computation of capital gains/loss. Analysis: 1. The case involved a deed of trust executed by Tulsiram Devidayal, where certain properties were settled on beneficiaries, including the assessee and his wife. Upon the death of the settlor's wife, the assessee inherited a 12.5% share in the trust estate. Subsequently, the assessee assigned this share to another party, claiming a long-term capital loss. The dispute arose regarding the computation of this loss based on the market value as on 1-1-1954. 2. The assessee contended that he held a beneficial interest in the property, which he sold, resulting in a capital loss. The counsel highlighted assessments made on the income and wealth of the property, supporting the claim that no long-term capital gains should be assessed. The department, however, argued that the market value computed by the ITO was accurate based on various factors. 3. The Tribunal observed a misconception in the transaction, emphasizing that the asset claimed by the assessee did not exist as stated. The deed of trust did not confer the 12.5% share to the assessee or his wife on 1-1-1954. The asset in question was an expectancy on the death of the wife, not a tangible asset covered by law. 4. The judgment delved into the identification of the asset leading to the alleged capital gain/loss. It clarified that the property only devolved to the assessee upon his wife's death, and he did not receive it during her lifetime. The asset, being a right to income until the wife's death, was not transferred or sold by her, raising doubts on the claimed transaction. 5. The Tribunal further analyzed the nature of the right acquired by the assessee upon his wife's death, emphasizing that it was a personal right inherited by him. As this right had no original cost and was not purchased, no capital gains or losses could be computed on it. The judgment referenced a relevant legal precedent to support this conclusion. 6. The Tribunal highlighted the complexity of valuing a life interest asset, which diminishes over time, making it challenging to determine a cost of acquisition for capital gain/loss computation. It emphasized that the asset sold by the assessee was different from what he acquired, leading to the deletion of the addition of capital gains. The judgment concluded that the assessee was not entitled to any capital loss based on the detailed analysis provided. 7. Ultimately, the appeal was partly allowed, with the Tribunal ruling in favor of the assessee regarding the exclusion of capital gains. The judgment provided a comprehensive analysis of the trust deed provisions, asset identification, market value determination, and the legal principles governing capital gains computation in such cases.
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