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TMI Blog1997 (7) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... rther observed that the return was revised for the first time because the cost of acquisition did not include Rs. 3,91,575 which is the cost of construction of boundary wall, store and pump set. He also observed that the return was again revised because the assessee wanted to increase the cost of acquisition on account of certain payments made to HUDA totalling Rs. 2,11,314. He further observed that the industrial plot was bought from HUDA in the name of Capital Rubber Industries vide deed of conveyance dt.8th May, 1983, and that the cost of the plot was shown at Rs. 1,95,842. The stamp duty thereon was shown at Rs. 24,500. He also observed that the total payments made to HUDA on various dates were shown at Rs. 2,19,015. He, therefore, computed the total consideration passed on to HUDA before the deed of conveyance signed in 1983 plus the stamp duty at Rs. 2,43,515. The AO also noted that the payments made to HUDA were shown as withdrawal from the partnership concern namely, Capital Cycle Industries and Relaxo Rubbers. He also noted that the two partners, namely, Shri R.K. Dua and Shri M.L. Dua had contributed different amounts for the payment of instalments to HUDA. He also noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Rubber Industries should not be treated as non-existent before 1985, the assessee filed the copies of the balance sheets. In the ultimate analysis, the AO held that the assessee-firm acquired the plot only in 1985 without paying any consideration. He further referred to the provisions of s. 48 which illustrate cost with respect to certain modes of acquisition/payment. The AO held that the modes of acquisition of the plot by the assessee-firm, which came into existence only in November, 1985, is not covered under s. 49, according to which the cost of acquisition is taken as the cost of acquisition by the earlier owner. He, therefore, held that the cost of acquisition by the assessee for the said plot shall be taken as nil. He allowed the cost of construction to the extent of Rs. 3,94,619 in relation to boundary wall, store room and pump set. He further disallowed payments of Rs. 2,11,314 made to HUDA in 1982 before the plot was sold to Relaxo Footwear (P) Ltd. He, observed that the said payments were for clearing malba, security fees and extension fees. The AO held that the said payments could not be treated as cost of acquisition of the property. In view of the foregoing, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties can be arrived and that intention carried out consistently with rule of law, the Court will take that course". He further, relied on the decision of the Hon ble Supreme Court reported in Ram Laxman Sugar Mills vs. CIT Anr. (1967) 66 ITR 613 (SC). The learned counsel further contended that all the documents which were produced indicated that there was a partnership existing and terms were reduced into writing in November, 1985. He further contended that partners can bring into the partnership, property belonging to them, by the evidence of their intention to make it part of the assets of the partnership. He, therefore, urged that the partnership deed should be read as a whole and given its due as per intention of the parties. He further contended that the AO had erred in applying the provisions of s. 49 and submitted that the capital gain has to be determined under s. 48 and that the cost of acquisition should be taken as existing on the date of the conveyance deed. He also contended that the payments made to HUDA in the year 1992 as part of cost of improvement should be taken into account for determining the capital gains. 4. The learned CIT(A) considered the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced at p. 2 of the paper-book. It is mentioned in the said receipt that application form for allotment of plot of size 4000 sq. yds. in the proposed industrial area at Bahadurgarh along with bank draft dt.8th Dec., 1976, on Punjab National Bank for Rs. 8,000 from Capital Rubber Industries, E-13,RajouriGarden,New Delhi, has been received. He has also filed copies of receipts and payments received by HUDA from July, 1980, upto28th July, 1993, the details whereof have been mentioned at p. 1 of the paper-book. The learned counsel has also filed copies of the deed of partnership executed on29th Nov., 1985, as also the deed of conveyance of plot in question in favour of Capital Rubber Industries,New Delhi. In view of the said evidence, the learned counsel submitted that at best the partnership firm has to be treated as genuine from 29th Nov., 1985, though in terms of the provisions of the Partnership Act, even an oral agreement between the parties is recognised for constituting a partnership and the intention and conduct of the parties is relevant to determine that a partnership has come into existence. He stated that even if the firm is recognised from29th Nov., 1985, it will only effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of the said firm. Keeping in view the concession made by the learned counsel that at the most the firm can be recognised from the date of partnership deed, i.e., 29th Nov., 1985, we feel that the contentions of the learned counsel deserve to be accepted having regard to the provisions of the Partnership Act, 1932. In view of the said position, we feel that the cost of the plot has to be taken with reference to the total amount paid to HUDA and that the said cost of acquisition has to be indexed with reference to the financial year 1985. Further, the cost of construction has also to be indexed accordingly. We feel that the amounts paid by the assessee to HUDA with reference to the cost of improvement have to be taken into consideration while computing the capital gains. The assessee has computed the capital gains at Rs. 21,10,930 as mentioned in the statement of facts. The AO is, therefore, directed to verify the figures of said computation in the light of our decision and allow appropriate relief to the assessee. The AO is also directed to allow consequential relief to the assessee with reference to interest charged under ss. 234B and 234C. 8. In the result, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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