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TMI Blog2015 (1) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... on provision fails, accordingly, capital gain cannot be computed. In the aforesaid view of the matter, assessee, in the peculiar facts and circumstances of the case, cannot be charged to LTCG on the value of consideration deemed to have been received on execution of release deed. Accordingly, we do not find any infirmity in the order of ld. CIT(A), which is upheld. - Decided in favour of assessee. - ITA No. 1650/Hyd/2013 - - - Dated:- 7-1-2015 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Shri Rajat Mitra For the Respondent : ShriB. Shanti Kumar ORDER Per Saktijit Dey, J. M. This appeal by department is against order dated 30/08/13 of ld. CIT(A)-V, Hyderabad relating to AY 2009-10. 2. As can be seen from the ground raised, department is basically aggrieved with the decision of ld. CIT(A) in deleting the addition of ₹ 70,45,443 made by AO on account of Long Term Capital Gain (LTCG). 3. Briefly the facts relating to the issue in dispute are, assessee an individual derives income from liquor business. For the AY under dispute, assessee filed his return of income on 30/09/2009 declaring total income of ₹ 2,35,090. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 50C of the Act, treated SRO value as sale consideration deemed to have bee received by assessee and accordingly, computed LTCG at ₹ 70,45,443. Assessee challenged the computation of LTCG by AO in an appeal preferred before ld. CIT(A). 4. In course of hearing of appeal before ld. CIT(A), it was submitted by assessee that no part of the sale consideration was paid by assessee to the land owner and the assessee s name was mentioned in the sale deed only for the purpose of security. It wa submitted that later on for regularizing the ownership in the name of Shri Balaraj Goud, a release deed was executed though assessee did not receive any money. The value of ₹ 20 lakh was mentioned in the document only for registration purposes. It was submitted that to help and safeguard interest of Sri Krishan Rao Kesav, who is a friend, assessee signed release deed to ensure that sale transaction of the property as per MOU dated 03/06/2004 is completed. It was contended on behalf of assessee that in the MoU dated 03/06/04, between the vendor Sri Krishna Rao Kesav and Vendee Shri Balaraj Goud, assessee was not a party. Alternatively, it was submitted by assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... release deed amounts to transfer within the meaning of section 2(47) of the IT Ac, 1961. The whole appellant s arguments can be deducted to i) Whether execution of release deed was necessitated by section 17 of Registration Act, 1908, and not for the purpose of section 5 of transfer of Property Act, 1882: and ii) Whether or not the impugned release is regarded as a transfer for the purpose of capital gains, when cost of acquisition to appellant is nil and when there is no cost of acquisition, whether capital gain arises. 7. After carefully going through the facts of the case, the arguments put forth by the AR and various judicial pronouncements supra, I am of the opinion that the cost of acquisition to appellant being nil in the impugned property, capital gain does not arise in appellant s hands in view of the decision of Hon ble Supreme Court in the case of CIT Vs. B.C. Srinivasa Shetty [1981] 128 ITR 294. Further, the ratio applied in the decision of the Supreme Court was also followed by ITAT, Pune and Hon ble High Court of Gujarat. Therefore, the addition of ₹ 70,45,443 under the head capital gain is deleted. 6. Ld. DR submitted before us that by executing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee s share in the investment made towards purchase of the property. However, in an appeal preferred before ld. CIT(A) by assessee, the addition made by AO was deleted by taking note of the fact that in an assessment order passed u/s 143(3) read with section 147 of the Act for the AY 2005-06, entire investment of ₹ 19,47,680 was assessed at the hands of Shri B. Balaraj Goud. This fact remains uncontroverted. That being the case, the entire investment in purchase of property having been made by Shri B. Balaraj Goud and assessee having not made any investment, there is no cost of acquisition in so far as assessee is concerned. Therefore, even assuming assessee has received the amount of ₹ 20 lakhs on executing release deed, he cannot be charged to LTCG as there is no cost of acquisition to assessee. In case of CIT Vs. B.C. Srinivasa Shetty (supra), the Hon ble Supreme Court held as under: 7. Sec. 45 charges the profits or gains arising from the transfer of a capital asset to income-tax. The asset must be one which falls within the contemplation of the section. It must bear that quality which brings s. 45 into play. To determine whether the goodwill of a new busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computation and deductions set forth in s. 48 provide the principal basis for quantifying the income chargeable under the head Capital gains . The section provides that the income chargeable under that head shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset : (ii) the cost of acquisition of the capital asset . . . What is contemplated is an asset in the acquisition of which it is possible to envisage a cost. The intent goes to the nature and character of the asset, that it is an asset which possesses the inherent quality of being available on the expenditure of money to a person seeking to acquire it. It is immaterial that although the asset belongs to such a class, it may, on the facts of a certain case, be acquired without the payment of money. That kind of case is covered by s. 49 and its cost, for the purpose of s. 48, is determined in accordance with those provisions. There are other provisions which indicate that s. 48 is concerned with an asset capable of acquisition at a cost. Sec. 50 is one such provision. So also is such s s. (2) of s. 55. None of the provisions pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X
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