2005 (10) TMI 45

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..... 0-2005 - Judge(s) : P. D. DINAKARAN., N. KANNADASAN. JUDGMENT The judgment of the court was delivered by P.D. Dinakaran J.-The above tax case appeal is directed against the order of the Income-tax Appellate Tribunal in I.T.A. No. 1526/Mds/1999, dated February 14, 2005. The Revenue is the appellant. The assessment year involved is 1996-1997. The assessee is an ex-Ruler of Pudukkottai Samasthanam. The assessment has been made on Rajagopala Thondaiman as legal representative of the deceased assessee H.H. Raja Rajagopala Thondaiman. The case of the Revenue is that during the year of account, the assessee had sold his old palace at Pudukkottai for a consideration of Rs. 17,76,020 and claimed exemption on the sale proceeds. The Asses .....

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..... alace and hence no capital gain arises for taxation in respect of the transfer of such property. Consequently the appeal preferred by the Revenue was dismissed by the Tribunal. Aggrieved by the same, the Revenue has preferred the present appeal raising the following substantial question of law: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that there was no capital gains assessable in respect of the transfer of the site and palace at Pudukkottai belonging to the assessee for a consideration of Rs. 17,76,020 on the ground that there was no cost of acquisition and the capital gains could not be computed, ignoring the fact that the property in question was obtained in co .....

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..... he asset and not any profit or gain." At this juncture, we also feel it relevant to refer to another decision of the Madhya Pradesh High Court reported in CIT v. Pushpraj Singh [1998] 232 ITR 754, wherein it is held as under: "the Tribunal held that no capital gain was exigible on the transfer of shares and bonds on the ground that the assets in the form of shares and bonds belonged to the Government of India and subsequently half of the shares were transferred to the assessee not as a right but only by way of moral gesture on its part and according to the Tribunal, the assessee did not become the owner of the assets. The Tribunal held that the cost of acquisition of shares and securities was nil to the assessee and, therefore, no capital .....

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