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TMI Blog1979 (2) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal was right in holding that the assessee acquired a right to the capital asset and the assessee's right in the capital asset was subsequently extinguished ? (3) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal had valid materials to hold that the alleged loss suffered by Shri Damodara Mudaliar was on behalf of the assessee-firm ? " The assessee is a partnership firm consisting of Shri Damodara Mudaliar and Smt. T. Krishnaraj. Damodara Mudaliar entered into a " lease agreement " with the Government of Tamil Nadu to take on " lease " a developed plot in the Ambattur Estate for setting up a factory for manufacture of taps, dies, reamers, etc. He was, it was claimed, acting on behalf of the firm in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the loss should be allowed as a capital loss and it should be treated as the loss of the assessee-firm. At the instance of the revenue, there was an appeal to the Tribunal. After considering the facts, the Tribunal came to the conclusion that the loss should be considered as loss incurred by the firm, and that the loss was capital loss allowable under the Act. It is this order of the Tribunal that is, the subject-matter of the present reference. The real question for consideration is whether there was any loss, whether such loss, if any, was capital loss within the meaning of the statutory provisions and whether the loss arose to the assessee-firm. The details of the loss as shown in the Tribunal's order are as follows : Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is concerned, the Tribunal has pointed out in para. 6 of its order thus : " The said Damodara Mudaliar filed an application for allotment of a developed plot in the Ambattur Industrial Estate. He was accordingly allotted on 18-1-64, plot No. 3 in the Industrial Estate at Ambattur, after paying 50% of the cost of the land. The possession of the plot was taken over on 30-1-1964 and the document was executed by the Administrative Officer of the Ambattur Industrial Estate and registered on 29-1-1965. The balance of the purchase price was also remitted by Shri Damodara Mudaliar on 22-7-1966." The above extract shows that what was remitted by Damodara Mudaliar was towards the cost of the land. However, in the statement of the case, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould kindly resume possession of land and reimburse me with the amount so far remitted by me towards the cost of the plot." This letter was annexed as annex. D. The Tribunal has understood this letter as relinquishment of right over the plot allotted in the Ambattur Estate. It would have been more useful if the agreement containing cl. 16, to which reference has been made in the letter, had been made an annexure to the statement of the case. However, even in its absence, in view of the finding of the Tribunal, we would proceed on the basis that there was relinquishment of the rights over the plot granted to Damodara Mudaliar. As there is a relinquishment of right, there is a " transfer " within the meaning of s. 2(47) of the Act and, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss relating to licence. As far as the sum of Rs. 7,000 shown as travelling expenses to Germany is concerned, it did not relate to acquisition of licence, and, therefore, would not form part of acquisition of licence. Similarly, penal interest in a sum of Rs. 14.19, does not appear to have been incurred in connection with the acquisition of licence and cannot increase its cost. We are now left with Rs. 2,478.11 and Rs. 2,500. The sum of Rs. 2,478.11 represents the travelling expenses to New Delhi in connection with acquisition of import licence and also for foreign, collaboration agreement. The sum of Rs. 2,478.11 has been spent for a dual purpose and it is not possible to state what part of it relates to getting the approval of the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is ordinarily used in relation to right, title, interest, charge, debt, power, contract or estate . Also see CIT v. Vania Silk Mills (P.) Ltd. [1977] 107 ITR 300 (Guj). The cancellation of a licence would also fall within the scope of the expression " extinguishment of rights " in a capital asset and would, thus, be a transfer of capital asset. Thus, the assessee would be eligible for the allowance of a sum of Rs. 2,500 being the cost of the cancelled licence. The learned counsel for the revenue submitted that even assuming these two items, viz., Rs. 11,401.53 and Rs. 2,500, are liable to be allowed as capital loss, the firm is not eligible for the allowance. He referred to the application for allotment of developed plots in the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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