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TMI Blog1979 (1) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of the buses at Rs. 1,50,000 and the route value at Rs.2,70,000 ? 3. Whether, on the facts and in the circumstances of the case, profits under section 41(2), computed by the Tribunal is valid and proper ? 4. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that there was no liability to capital gains on the transfer of route permits? 5. Whether the Appellate Tribunal was right in holding that the correct basis for evaluating the market value of the land sold to Pratap Talkies on March 22, 1968, would be to take into account the market value as on January 15, 1961, on which date the agreement of sale was executed ? 6. Whether the Appellate Tribunal was right in fixing the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f land in Tirupathi and the lands were sold to M/s. Pratap Talkies for a sum of Rs. 10,000 as stated in the sale deed. The ITO took the sale price at Rs. 1,06,000 and computed the capital gains accordingly. The computation of the profit under s. 41(2) and of the capital gains in relation to the lands was confirmed by the AAC. The assessee appealed to the Appellate Tribunal. The Tribunal took the sale price of the 9 buses at Rs. 1,50,000 for various reasons to be presently considered and took the value of the route rights at Rs. 2,70,000. The computation of the profit liable to tax under s. 41(2) was directed to be made accordingly. As far as route rights are concerned, the conclusion of the Tribunal was that there was no capital gains. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be accepted. Question No. 1 challenges only the existence of the materials to support the conclusion of the Tribunal in allocating the sale price of the buses at Rs. 1,50,000, though during the course of the arguments it was stated that in the case of the purchaser of the 9 buses, viz., Velu Mudaliar, the Appellate Tribunal itself had taken their value at a higher figure for the purpose of grant of depreciation, and that, therefore, the higher figure should have been taken in the present case also, we do not have any material to show that in the purchaser's case a higher figure was taken. In fact, before the Tribunal the contention for the assessee was that a sum of Rs. 1,50,000 had been taken as the cost of the buses in the hands of the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egards route rights. As already seen the Tribunal had taken the value of the route rights at Rs. 2,70,000. The Tribunal has held that the sale price of the route rights did not give rise to any capital gains because of its earlier order in I.T.A. No.1621/MDS/1972-73, dated November 30, 1973, and also of a decision of the Andhra Pradesh High Court in CIT v. Krishna Sons. The Tribunal's order dated November 30, 1973, is not before us and we have no idea of the reasons given by the Tribunal in that case to come to the conclusion that there can be no capital gains on the sale of the route rights. Presumably the reasons given by them in the said order are also to be found in sub-paras. (a) and (b) of para 10 of the order now under consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been pointed out in our judgment that the decision in Rathnam Nadar's case [1969] 71 ITR 433 (Mad) was rendered in connection with a self- generating asset, viz., goodwill, and that the assessee in that case had not to pay anything as and by way of cost of acquisition of such an asset. It was pointed out that the route permit is one granted to the assessee as a result of an application having to be made and as a result of the assessee succeeding in the appeal and subsequent proceedings before courts, in case there is any objection to the grant of the permit by any one else. It was, therefore, pointed out that in the case of route rights, it would not be possible to proceed on the basis that it was a self-generating asset that it could hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken at Rs. 50,000. The Tribunal examined the point as regards the market value of the property and came to the conclusion that the market value as on the date of the agreement, viz., January 15, 1961, would alone have to be taken. On that basis, in the view of the Tribunal, the sum of Rs. 10,000 shown in the agreement was the proper consideration. However, as the assessee had agreed even before the ITO to the sale price being taken at Rs. 50,000, the Tribunal directed that the sum of Rs. 50,000 would be taken as the basis for the computation of the capital gains. It is this conclusion of the Tribunal that is the subject-matter of the reference in the three questions, viz., 5, 6 and 7. Out of the three questions, question No. 6 seems to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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