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TMI Blog2008 (2) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appellate Tribunal, Chandigarh, vide order dated April 30, 1984, passed in R. A. No. 141 of 1983, arising out of I. T. A. No. 760 of 1981, for the assessment year 1974-75 has referred the following question to this court for its opinion "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal erred in law in holding that the assessee was not liable to pay capital gains tax ?" 2 The brief facts, out of which the present reference has arisen, are as under: 3 The assessee-respondent filed a return declaring taxable income of Rs. 6,110 on December 13, 1977. In response to the notice under section 143(2), the assessee through his counsel attended the assessment proceedings; It is the case of the assessee th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 462(ASR)/1979 and 694 (ASR)/1979, dated April 29,1981. 5 It is relevant to mention here that Baldev Singhi's case was on identical facts and he had also acquired the land on the basis of the same court decree dated January 31, 1972, vide which the present appellant had acquired the land. 6 The Revenue filed a reference application under section 256(1) of the Income-tax Act, with a prayer for referring the question mentioned in the application, said to be a question of law and arising out of the Tribunal's order dated September 1, 1981. 7 It has been contended by counsel for the Revenue that the profits or gains arising from the acquisition of the assessee's land is assessable under the head "Capital gains". Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarded as never intended by section 45 to be the subject of the charge. What is complated by section 48 (ii) is an asset in the acquisition of which it is .possible to envisage a cost. It must be an asset which possesses the inherent quality of being available on the expenditure of money to a person seeking to acquire it. None of the provisions pertaining to the head "Capital gains" suggests that they include an asset in the acquisition of which no cost at all can be conceived. 11 This court has also followed the above ratio of law in the case of CIT v. New Suraj Transport Corporation P. Ltd. [1992] 194 ITR 458. 12 A perusal of the facts of the present case would show that the assessee entered into an agreement with Sh. Surjan Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per order dated January 31, 1972, which we have abstracted supra. The historical background of the acquisition of the land by Sh. Surjan Singh also shows that there is no record of any payment made for the acquisition of the land. In any case, the assessee acquired the land in view of the right of occupancy, etc., under section 8 of the Punjab Tenancy Act read with section 3 of the Punjab Occupancy Tenants (Vesting of Proprietary Rights) Act, 1952, without payment of anything. In other words, the cost of the acquisition of the land to the assessee was nil. When such a situation arises and an asset acquired by the assessee is sold, our view is that no capital gains is assessable to tax under the Act arising out of such a transaction." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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