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TMI Blog1987 (1) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... ired from the assessee regarding the fair market value of the jewellery on the date of partition and as per the Approved Valuer's certificate its value came to Rs. 24,29,250. The ITO was of the view that the assessee should be taxed under s. 69B to the tune of Rs. 20,94,450 representing the difference between the value of the date of partition as determined by the approved valuer of the jewellery as disclosed under the voluntary disclosure scheme cannot be treated as income of the assessee at all and further since the years of acquisition had been mentioned in the VDS which had been so accepted by the Commissioner, the ITO cannot but accept the years of acquisition as such as the assessee had been grated immunity from explaining the sources and any other particulars regarding their acquisition. The ITO was of the view that since the disclosure was under the wealth tax only he was entitled to make enquiries in regard to the source etc. and he was further of the view that since the assessee was found to be the owner of the property in the year of assessment under review the sources of which could not be explained by the assessee, the value far exceeding the value shown in the volunta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be enquired into afresh. The action of the ITO was not in accordance with the Boards clarification dt. 20th Nov., 1975. The CIT(A), therefore, found that the addition under the head was not maintainable and deleted the same. 4. On the issue of attraction of capital gains on the sale of one of the items of jewellery on 21st Feb.,1976 which was treated as profit arising from the business by the ITO and added as such. The plea of the assessee before the CIT(A) was that the facts of the assessee, case was identical in all respects with the fact in the case of Mannalal Nirmal Surana vs. ITO (1982) 14 TTJ (Del) 392 (SB) : (1982) 1 ITD 412 (Del) (SB) decided by the Special Bench of the Tribunal. The CIT(A) observed. "The facts and circumstances appear to be same by and large in the two cases. It was held by the ITAT in that case that the income, which accrued to the assessee on the sale of capital assets was of the nature of the capital gains. In this case accordingly, besides the declared house property income of Rs. 2,751 and interest income of Rs. 2,751 and interest income of Rs. 8,604, there should be capital gains (long term), arising out of the transaction on 21st Feb., 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further observed that there could not be arising of any income on mere revaluation of assets. The real test to be applied is whether the assessee had a legally enforceable right to receive the income or not. It was further observed that no trading activity could be attributed to the HUF at any time. Even the sale of three items in Oct., 1976 was an isolated transaction which was neither preceded nor succeeded by any trading activity. Thus, the sale of these items was only of the nature of realisation of sale of capital assets. Even though the assessee had chosen to describe it as a trading activity by conversion of capital assets into stock-in-trade. Accordingly, the income which accrued to the assessee was of the nature of capital gains. 8. The assessee's counsel submitted that the CIT(A) had rightly observed that the facts of the case of the assessee was identical with the case that was considered by the Special Bench. In the case of the assessee-HUF there had been no business at all that was carried from 1957 till 1976 for a period of 19 years. The business that was done upto 1957 was partitioned amongst the members, who thereafter carried on the business and the partition ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an isolated one, neither proceeded, nor succeeded to by any trading activity the sale of a few items are in the nature of long term capital as being sold, the nature of realisation being sale of capital assets, s. 45 would only apply. (b) The mere appreciation in value would not result in any income as an enforceable right cannot be against oneself, it will arise only when the assets are transferred to the third party. Accordingly, no income has arisen to the HUF on the revaluation of assets. 11. Since as observed above, the facts and circumstances are the same as in the case of the Special Bench the treatment given to the difference between the market value and the cost as disclosed under the V.D.S. as income from other sources is patently wrong as it tantamounts to treating something as income which has not arisen out of any contract or otherwise. Further, in view of the facts that the disclosure so made with the contents have been accepted by the Commissioner. It has to be accepted by the ITO that the years of acquisition are from 1943-44 to 1956-57 only. Thus, there are not acquisitions in the year under review. Therefore, on both these counts treating them as income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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