9911796707
TMI Blog1978 (4) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... umulative preference shares of Khemka Properties P. Ltd. in the assessment year 1962-63 at the rate of Rs. 48.50 per share. The shares were of the face value of Rs. 100 each. The ITO held that the shares had been sold at a value less than the value which would have obtained in a normal transaction and, therefore, concluded that s. 52(2) of the I.T. Act, 1961, applied to the facts. With the approval of the IAC he held that the face value of the shares was their market value and accordingly he disallowed the loss claimed by the assessee. Being aggrieved, the assessee preferred an appeal. The AAC on the basis of the W.T. (Amend.) Rules, 1967, computed the value of the said shares to be Rs. 81.51 each. He further found that there was a direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken to be the fair market value of the capital asset on the date of the transfer." The Tribunal found that the language of the original s. 52 was similar to the amended s. 52(1) and held that the finding of the AAC that by the impugned transaction the assessee has sought to avoid or reduce future capital gains that may become chargeable in subsequent years by claiming a carry forward and the set-off of the capital loss was neither sound nor correct. The Tribunal held that the liability contemplated by s. 45 was a present and existing liability to be charged to capital gains and was not a potential or prospective liability that might arise in future. The Tribunal concluded that, in the facts, s. 52 of the I.T. Act, 1961, had no applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the assessment. It also appears that the IAC gave sanction to the proposed action by the ITO on the basis of this non-existent section. To make matters worse, in appeal, the AAC applied another non-existent s. 52(1). The AAC arrogated to himself the jurisdiction of the ITO and recorded his own reasons purporting to discover for the first time that it was the intention of the assessee to avoid liability under s. 45. The IAC did not come into the picture at all. The purported reasons of the AAC on which he formed his belief as to the intention of the assessee is equally unsound. He assumed that the assessee's capital loss would be carried forward. He did not consider whether the capital assets were short-term capital assets or not or w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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