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Cost of acquisition of property in dispute for assessment year 1991-92. Analysis: Issue 1: Cost of Acquisition The appeal pertains to the cost of acquisition of a property sold by the assessee, a partner in a partnership firm. The dispute revolves around whether the cost of acquisition should be based on the market value of the property on the date of retirement or the book value shown in the partnership firm. The Assessing Officer adopted the book value, leading to a lower deduction and a higher net capital gain. The CIT(A) held that the partner acquired the assets not by virtue of the retirement deed but by being a partner in the firm, directing the cost of acquisition to be that of the firm. The assessee contended that the market value on the date of retirement should be considered as the cost of acquisition. The tribunal noted that the statute did not treat the transfer of property from the firm to retiring partners as a transfer before 1-4-1988. Section 48 of the Income Tax Act deals with the computation of capital gains, and the term 'cost of acquisition' was not defined, thus requiring its natural meaning to be applied. The tribunal concluded that the cost of acquisition for the retiring partners should be the market value on the date of retirement, not the cost for which the previous owner acquired the property. The appeal was allowed in favor of the assessee. Conclusion The tribunal ruled in favor of the assessee, determining that the cost of acquisition for the retiring partners should be the market value of the property on the date of retirement. The decision was based on the interpretation of relevant provisions of the Income Tax Act and the specific circumstances of the case, distinguishing it from previous judgments and emphasizing the natural meaning of 'cost of acquisition' in the absence of a specific definition in the Act.
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