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TMI Blog1998 (7) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... of Devi Cinema at Bokaro, etc. ITA Nos. 835 836/Pat./1992 - AYs 1990-91 1991-92 : There is a common ground in both the appeals by the assessee. This relates to the addition on account of estimate of the market value of the assets sold forming part of the block of assets of leasing business. The Assessing Officer after detailed discussions at pages 5 to 8 of the impugned assessment order held that the lease was found to be regular and valid. Thus, there was no dispute regarding the validity of the leasing business of the assessee. However, the Assessing Officer was not satisfied about the sale prices of the leased assets at the termination of the lease period. He found that there was residual price of the asset fixed in the lease ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e added that under no circumstances, in 3 years or 5 years the old Maruti car show in book value of Rs. 44,483 would be sold at just Rs. 55,000 only after use of 3 years. The fair market price of the same was much higher in the market. He, therefore, held that the fair market value had to be taken into account for the purpose of sale consideration and not the residual value fixed in the agreement well in advance. 4. The Assessing Officer further observed that in some of the cars it might be loss because of very bad condition but some cars might be in very good running condition even if they were very old. Therefore, the value shown by the assessee could not be accepted. He added that some of the vehicles he might have sold for a marginal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of each of the 27 vehicles in question in the assessment year 1991-92. Similarly details had been filed in respect of the 12 vehicles in the assessment year 1991-92. He added that the Assessing Officer had not pointed out any discrepancy in the details filed and he had not brought any material on record to show that the sale value and the actual profit shown were wrong and that the sale value and the profit on sale of the vehicles were as much as taken by the Assessing Officer in the impugned assessments. He further added that the sale price estimated by the Assessing Officer was hypothetically based on conjecture and surmises and not on any material evidence on record. 7.2 The ld. counsel further submitted that the Assessing Officer had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Act and the submissions and contentions of the contending parties. We are of the view that the Assessing Officer was not justified in estimating higher profit on sale of the leased Vehicles. There was no basis and there was no material on record to warrant and support the Assessing Officer's estimates. His estimates were based on conjecture and surmises. 9.1 Again, there was no legal validity about the Assessing Officer's estimates of the higher sale price and profit of the leased vehicles. Section 52 of the IT Act had been omitted by the Finance Act, 1987, w.e.f. 1-4-1988. Thus, the Assessing Officer had no power to estimate higher sale price. 9.2 Section 52 was omitted w.e.f. 1-4-1988 after the introduction of the concept of 'Bloc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item (i)." 9.4 Thus, the sale price of the leased vehicles had to be deducted from the WDV and there was no question of computing profit on the sale of the leased vehicles 9.5 The question of determining even the capital gains on sale of leased vehicles would have arisen only if the block of assets in question had ceased to exist as a whole. In this connection, the provisions of section 50 is relevant and reproduced as under : "Special provision for computation of capital gains in case of depreciable assets. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets." 9.6 In the present case neither sub-section (1) nor sub-section (2) of section 50 was applicable. The full value of the consideration on sale of the leased vehicles did not exceed the aggregate of the WDV etc. as provided in subsection (1) of section 50 nor the block of assets in question had ceased to exist as such as required under sub-section (2) of section 50 and, as such, there was no question of even computing capital gains in respect of sale of the leased vehicles. 9.7 Again, as a result of the omission of sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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