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TMI Blog1975 (8) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ad nominated the assessees as the persons by whom separate leases of plot No. 84 would be accepted and, therefore, the lease deeds might be executed by the Government in favour of the assessees. The assessees gave their consent to such leases being executed in their favour. This plot was in the possession of the military authorities and the military authorities handed over possession of this plot to the assessees on December 6, 1946. A draft of the lease to be executed on behalf of the Government of Bombay was prepared in 1949 which refers to the original agreement between Sonawala and Patel on the one hand and the Governor of Bombay on the other and the payment of a premium of Rs. 83,938. On August 23, 1951, an agreement was entered into between the assessees and one Jivan Baliram Revaskar for assignment of the right, title, and interest of the assessees in this plot. Pursuant to this agreement a sum Rs. 50,000 was paid by Jivan Baliram Revaskar to the assessees. The assignment was to be completed on or before December 31, 1955, and the balance of the consideration amount was to be paid on completion of the deed of assignment. Pursuant to clause 9 of the agreement the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on February 4, 1955, and the first payment was received on October 31,1955. The income-tax Officer held that as the deed of assignment was executed it became complete and the title to the property had passed to the purchaser, Ramchand Hiranandani, on March 23, 1959, and so the capital gains ought to be assessed for the year under consideration. The Income-tax Officer required the assessees to state whether they would like to exercise the option of the substitution of the fair market value as on January 1, 1954, and if so, the assessees might prove the cost of the land as on January 1, 1954. The assessees contended that the market value of the plot as on January 1, 1954, was to be calculated at the rate of Rs. 195 per sq. yd. That contention was not accepted by the Income-tax Officer. He took the view that as the purchase of the plot by the assessees was completed only on January 24, 1955, when the indenture of lease was registered in their favour, the assessees were not entitled to substitution of the value as on January 1, 1954, under the third proviso to section 12B(2) of the Act. In other words, the Income-tax Officer took the view that the assessees were not the owners of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to fix the value as on January 1, 1954, after hearing the assessees and considering any material or submissions that may be made by the assessees on this matter and directed him to compute the capital gains in the light of the findings and directions given in the order. On these facts, the question referred to for our determination is as under : " Whether, on the facts and in the circumstances of the case, the assessees were entitled to the substitution of the market value of the property as on January 1, 1954, in accordance with the third proviso to section 12B(2) of the Indian Income-tax Act, 1922? " Mr. Joshi on behalf of the revenue contended that as the indenture of lease in respect of plot No. 84 was executed in favour of the assessees by the Governor of Bombay on May 12, 1954, and as the said indenture of lease was duly registered on January 24, 1955, the assessees could not be regarded as the owners of the property as on, January 1, 1954, and the Tribunal was not justified in directing the Income-tax Officer to fix the value as on January 1, 1954. Mr. Joshi urged that the Tribunal was not justified in invoking the provisions of section 53A of the Transfer of Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r making the following deductions from the full value of the consideration for which the sale...or transfer of the capital asset is made, namely : (i) expenditure incurred solely in connection with such sale ... or transfer ; (ii) the actual cost to the assessee of the capital asset, including any expenditure of a capital nature incurred and borne by him in making any additions or alterations thereto, but excluding any expenditure in respect of which any allowance is admissible under any provision of sections 8, 9, 10 and 12. There are four provisos to sub-section (2) and we are concerned in the present case with proviso No. 3. That proviso is as under : " Provided further that where the capital asset became the property of the assessee, or of the previous owner where the cost of the capital asset to the previous owner is to be taken in accordance with sub-section (3), before the 1st day of January, 1954, he may, on proof of the fair market value thereof on the said date to the satisfaction of the Income-tax Officer, substitute for the actual cost such fair market value which shall be deemed to be the actual cost to him of the asset, and which shall be reduced by the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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