9911796707
TMI Blog1983 (1) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... that, really speaking, there was no cost of acquisition at all for the assessee's family. According to him, when the property was thrown into the joint family hotchpot, the family got it for nothing. Nevertheless, the ITO adopted Rs. 70,535 as the cost of acquisition to the family apparently because it represented the cost to Krishnamoorthy, who threw the property into the joint family hotchpot. On appeal by the assessee, the Tribunal took the view that the sum of Rs. 70,535 cannot be regarded as the cost acquisition of the property by the family, but can only be regarded as cost of acquisition to the previous owner, Krishnamoorthy. The Tribunal pointed out that this was not case in which under any special provisions of the statute, the cost to the previous owner could be regarded as the cost to the assessee for the purpose of computation of capital gains. According to the Tribunal, although the assessee's family got the property for a song, nevertheless its cost to the assessee's family of this property must be regarded as represented by the real value of that property on the date when the property was thrown into the joint family hotchpot. In this reference, at the instanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication of the precise liability, it was necessary to find out the cost of acquisition and evaluate it in every case. Incidentally, the important role which the element of cost of acquisition played in the statutory scheme of charge prompted some of our courts to hold that where there is no cost of acquisition, then there can be no capital gains tax either. This doctrine was laid down for the first time by the Ratnam Nadar's case [1969] 71 ITR 433 decided by this court. After this decision came many others in several other High Courts. It was not as though Parliament was unaware of situations in which a person might become the owner of a capital asset without having to pay anything for it. Illustrations of acquisition of a capital asset at no cost to the acquirer can be found in cases where a person obtains a gift of a capital asset, or inherits a capital asset, or gets a capital asset by way of allotment under a family partition. In all these cases, the person who acquires the capital asset, gets it gratis, without having to pay anything for acquiring it. If he were to dispose of the property subsequently and realise the profits, the question may arise whether capital gains aro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the house property as its capital asset. We think there is considerable force in this argument of the Department's learned counsel. The manner by which the separate property of Krishnamoorthy became the property of the assessee family may be described in various ways. We may say that Krishnamoorthy threw his separate profit into the joint family hotchpot. Or, we may say that he converted his separate property into joint family property. Or, we may say that he blended his separate property with the joint family property. Or, we may say that he impressed his separate property with the character of joint family property. Whichever way we describe the process, it would seem that we can hardly avoid the use of metaphors. This is a branch of Hindu law in which academicians as well as practising lawyers and courts have to make do with metaphors, and not with precise legal expressions. There is no use blaming them. The process is a unique one. It is not gift. It is not a settlement. It is not an arrangement, much less an agreement. It does require the coparcener concerned abandoning his separate dominion over his separate property. But that is all. The moment he expressed a clear intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce or succession or inheritance, must be regarded as a devolution. As an illustration of the wide use Of the expression " devolution " may be cited the provisions of 0. 22, r. 10 of the Code of Civil Procedure. Order 22, inter alia, deals with the consequences to pending suit on the death of a party thereto. Rule 10 of 0. 22 speaks about other cases of an assignment, creation of " devolution " of any interest during the pendency of a suit. The expression " devolution is employed in that rule in its widest sense. It may be of interest to note that one of the special meanings given by the dictionary to the expression devolution ", and, particularly to the cognate expression " devolve ", is to throw ". It may be quite a reflection that " throwing into the family hotchpot " is devolution not only in the wide sense of the term, but also in the special dictionary sense of " throw We may contrast the expression " devolution " with " disposition ". "Disposition " implies that there must be a transfer of a property by one person to another either by way of conveyance or otherwise, either inter vivos or by testamentary disposition. " Devolution ", on the other hand, would comprise not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee family is entitled to add to the cost of acquisition, in the computation of its taxable capital gains. As we earlier indicated, the officer's action must be upheld on the basis of s. 49 of the Act under which, because the property is derived by the assessee by devolution, its cost of acquisition must be deemed to be the cost for which the previous owner of the property acquired the property, as increased by the cost of any improvement of the property incurred by the previous owner. It follows that we must reject the Tribunal's view that the cost of acquisition to the assessee family must be based on which the Tribunal described as the " real value " of the property as on the date when Krishnamoorthy threw the property into the joint family hotchpot. Apparently, by " real value of the property " the Tribunal meant the market value of the property as on the date when the property was converted from being the separate property of Krishnamoorthy into property of the joint family. However, there is no scope for introducing any a Priori theory of costing when a pertinent statutory provision squarely applies to a transaction. Since we have held that the cost of acquisition must be de ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
