9911796707
TMI Blog1986 (11) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee were outstanding for the assessment years 1974-75 to 1977-78 as well as estate duty on the death of his father, the Income-tax Department initiated recovery proceedings against the assessee. The Income-tax Department attached 22,059 sq. yds. of vacant land on 1-2-1983. Out of this, the Income-tax Department sold 5,727.31 sq. mts. of land divided into 33 plots on 21-3-1983 and 22-3-1983 by way of public auction. Rs. 65,50,870 was the gross realisation of 33 plots. 4. On the aforesaid facts, during the assessment proceedings, it was submitted on behalf of the assessee that no capital gains could be worked out and included in his total income. The assessee took up this stand as the land was not purchased by any of his predecessors bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the expenditure of Rs. 8,32,570 incurred in connection with the sale of 33 plots should be deducted from the sale realisation of Rs. 65,50,870. Deducting Rs. 3,000 and Rs. 8,32,574 from the sale proceeds of Rs. 65,50,870, the ITO worked out a figure of Rs. 57,15,296. From this amount, the ITO deducted certain amount as contemplated under section 80T of the Income-tax Act, 1961 ('the Act') and finally, worked out chargeable capital gains of Rs. 41,11,414, which was included in the total income of the assessee determined at Rs. 41,30,100. 5. In appeal before the Commissioner (Appeals), the assessee once again reiterated the submissions which were made before the ITO and urged that the ITO was not justified in including capital gains of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined as per the provisions of section 49(1)(iii)(a). The Explanation to sub-section (1) of section 49, defines the expression 'previous owner of the property'. As the assessee had inherited the property in question, the cost of acquisition of the said property has to be traced to the first owner who had acquired the same. Inviting the attention of the Tribunal to pages 29 and 30 of his paper book containing the history of the Ruler of Rajkot State from samvat year 1608, the learned counsel for the assessee highlighted the fact that the land in question was acquired by the forefathers of the assessee, by conquest for which no payment was made. In other words, he wanted to impress upon the Tribunal that the cost of acquisition of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was nil, no capital gains should be worked out which could be included in the total income of the assessee. He, therefore, urged that since the facts and circumstances obtaining in the instant case are in pari materia with the facts and circumstances considered by the Hon'ble Madhya Pradesh High Court, the capital gains of Rs. 41,11,414 included in the total income of the assessee, should be deleted. 6.1 Alternatively, the learned counsel for the assessee, relying on the order of the Tribunal in the case of Attili Narayana Rao v. ITO [1986] 50 CTR (Trib.) 20 (Hyd.), submitted that the tax liabilities which were recovered by the revenue out of the sale proceeds of Rs. 65,50,870 should be deducted and only on the balance, the chargeable cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any submissions in this regard. Relying on the decision of the Hon'ble Madhya Pradesh High Court in the cases of Smt. Maharani Ushadevi v. CIT [1981] 131 ITR 445 and Raja Ajitsingh of Jhabua v. CIT [1981] 132 ITR 412, he submitted that the exemption granted under Paragraph B of the Taxation Concession Order, 1950 did not extend to the capital gains. We fail to appreciate why these two decisions are cited as it is not the assessee's case that capital gains arising out of sale proceeds of the property in question were exempt from taxation. It appears to us that the learned representative for the department has not properly appreciated the assessee's case. Regarding alternative submission made on behalf of the assessee, the learned represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad 'Capital gains'. From the full value of the consideration received on the transfer of the capital asset, the cost of acquisition of the capital asset plus cost of any improvement thereto has to be deducted. The balance amount is brought to tax as capital gains under section 45 of the Act. In the case of B.C. Srinivasa Setty, the Hon'ble Supreme Court has held that where there is no cost of acquisition of the capital asset, the computation section of income chargeable under the head 'Capital gains' fails and, therefore, the capital gains cannot be brought to tax. It is no doubt true that in the reported case, the Hon'ble Supreme Court was dealing with goodwill which was a self-generating asset. But the ratio laid down in that case, accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
