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TMI Blog1990 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... g the assessee's properties under section 7(1) and computing his net wealth under section 2(m) for the assessment year 1963-64, the assessee was not entitled to deduction of liability for capital gains tax which was a statutory liability of the assessee if the assessee's properties were sold or deemed to have been sold as con templated by section 7(1)?" Briefly stated the facts of the case are these : The assessee owns immovable properties assessable in his hands for payment of wealth-tax. They include immovable properties situated in Infantry Road, Bangalore, which was self-occupied. The Wealth-tax Officer reopening the assessment, considered that the value of the immovable properties should be ascertained as on the date of valuation for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the valuation date were to take place should be deducted. In support of the above contention, learned counsel relied on the judgment of the Delhi High Court in P. N. Sikand v. CWT [1974] 96 ITR 424, which has been confirmed by the Supreme Court in CWT v. P. N. Sikand [1977] 107 ITR 922. In the said case, the facts were these : A land and building had been leased by the Delhi Development Authority in favour of the assessee. The conditions of the lease were that, before any assignment or transfer of the land and building, permission should be obtained for doing so from the Delhi Development Authority, and further, fifty per cent. of the unearned increase in the value of the asset which the lessee receives on such assignment or transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same principle must be applied even in respect of the liability to pay capital gains tax. Learned counsel for the Revenue, however, submitted that the above decision of the Supreme Court is not at all apposite to the question arising for consideration in this case. He relied on the judgment of the Supreme Court in Pandit Lakshmi Kant Jha v. CWT [1973] 90 ITR 97. In that case, the question for consideration was whether, in computing the value of an immovable property as on the valuation date, brokerage or commission payable by the vendor in the event of sale was deductible from the value of the asset as on the date of valuation. On an interpretation of section 7(1) of the Act, the Supreme Court held as follows (p. 103) : "There is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adras High Court in T. S. Srinivasa Iyer v. CWT [1976] 104 ITR 625. In the said case, an identical question had been referred for the opinion of the Madras High Court. The Madras High Court, on an interpretation of section 7(1) of the Act and section 2(m) which defines the expression "net wealth", and applying the ratio of the judgment of the Supreme Court in Pandit Lakshmi Kant Jha v. CWT [1973] 90 ITR 97, held that section 7(1) refers to the cost price which the purchaser would have paid if the asset was sold in the open market and that no hypothetical expenditure in regard to the sale was deductible and, in any event, no capital gains tax is deductible in determining the value of the assets under section 7 of the Act. Section 7(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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