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TMI Blog1990 (11) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... ing regard to the clear language used in section 168(3) of the Income tax Act, 1961, one assessment made on the executors is sustainable in law ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that both the instalments of principal amount and interest on annuity deposit are taxable under the provisions of the Income-tax Act, 1961 ? (4) If the answer to the above third question is in the affirmative, whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the proportionate estate duty payable on the annuity deposit is not deductible from the annuity deposit assessable as income ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in upholding the disallowance of proportionate estate duty paid on the assets sold, namely, war stock bonds, lands and jewellery, while computing the gains ? (6) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in adopting the market value of the jewellery as on January 1, 1954, as the cost for the purpose of computing the capital gains ? (7) Whether, on the facts and in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. In the result we have to reiterate on the concession made by counsel on both sides that the first six questions referred in these two cases are also answered in the affirmative and a against the assessee. What remains to be considered by us is the 7th question which has not been answered in the aforementioned cases. Brief facts may be stated relating to question No. 7 and they are as follows : The estate of late H. H. Rajkuvera, Dowager Maharani Saheb of Gondal was assessed for the years 1975-76 and 1976-77 in the hands of the executrix of her estate. It appears that for the assessment year 1975-76, certain jewellery was sold as a result of which certain gains accrued under the head "capital gains" and the same was sought to be set off against the loss incurred in the earlier years and brought forward. That came to be accepted by the assessing authority and assessment concluded as such. In regard to that year, the assessee does not raise any dispute. However, for the assessment year 1976-77, under the heading "capital gain/loss" was computed as follows : " Capital gain/loss is computed as under: (Rs.) (Rs.) (a) Sale of war stock bonds 15,80,610 Less : Cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum resulting in capital loss should, thereafter, be converted into rupees as on the date of sale as returned by the assessee petitioner in which case the capital loss would be much higher than the sum arrived at by the assessing authority. In other words, the claim is that the capital loss should be worked out on the capital loss at pounds 2,35,115 at the rate of Rs. 18 per pound, the exchange rate prevalent subsequent to the devaluation of rupee amounting to Rs. 42,32,070. Shri S. P. Bhat, learned counsel for the petitioners, has drawn our attention to rule 115 of the Income-tax Rules, 1962 (hereinafter referred to as "the Rules " ), as it was then, which reads as follows : "115. Rate of exchange for conversion into rupees of income expressed in foreign currency. The rates of exchange for the calculation of the value in rupees of any income shall be as follows : (a) in respect of income accruing or arising or deemed to accrue or arise to the assessee or received or deemed to be received by him or on his behalf before the 6th day of June, 1966 (i) 1 sh. 6 d. = Re. 1 (ii) U.S. $ 1 = Rs. 4.762 (b) in respect of income accruing or arising or deemed to accrue or arise to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed in computing the capital gains or loss, as the case may be. If the Revenue takes the value of pound sterling as on January 1, 1954, for the purpose of determining the acquisition value of the capital asset and the exchange rate of the pound sterling as on the date of sale, it would be acting outside the scope of the Rules and, therefore, outside the provisions of the Act. We are of the view, even if the Revenue contends that the acquisition value as on January 1, 1954, would be relevant, then the rate of exchange determining the acquisition value must remain uniform when applied to the sale price realised on the sale of the capital asset computed in terms of section 48 of the Act. In other words, assuming that rule 115 of the Rules is not attracted for computing the capital gain or loss, the uniform rate of exchange must be applied in determining the capital gain or loss arising out of the difference between the sale price and the cost of acquisition of the capital asset. That proposition not only stands to reason but appears to be in conformity with rule 115 of the Rules as it then was and as it now stands amended. In the scheme of the Act or the Rules, there is no other pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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