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TMI Blog1984 (7) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... me that the route permits would be roughly between 2 to 2 1/2 times of the net income. He adopted the cost of the route permits at Rs. 40,000. Deducting this amount from the total sale receipts of Rs. 95,000, the value of the buses sold was taken by him at Rs. 55,000. He held that the surplus realised on sale of route permits is assessable as capital gain. Thus, the entire amount of Rs. 40,000 being the value of route permits was assessed to capital gains. In respect of the sale of buses he worked out the profit under section 41(2) of the Income-tax Act, 1961 ('the Act'), at Rs. 33,791 after deducting the written down value of Rs. 21,209 from the sale price of Rs. 55,000. Thus, he brought to tax Rs. 33,791 as profit under section 41(2) on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 21,209. Even if the scrap of these six buses is sold, the assessee will be able to get Rs. 55,000. Thus, the value taken at Rs. 55,000 for six buses is quite reasonable. Thus, the profit computed under section 41(2) is perfectly justified. 4. The second question is with regard to the capital gains computed with respect to the route permits. In Addl. CIT v. Ganapathi Raju Jagi Sanyasi Raju [1979] 119 ITR 715, the Andhra Pradesh High Court has held that where when the route permit was granted, no amount was paid by the operator for the purpose of acquiring it and it is only over a number of years because of various factors that the permit acquires some value, the value of the route permit cannot be evaluated as on the date of acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is possible to envisage a cost. It was observed as under: "What is contemplated is an asset in the acquisition of which it is possible to envisage a cost. The intent goes, to the nature and character of the asset, that it is an asset which possesses the inherent quality of being available on the expenditure of money to a person seeking to acquire it. It is immaterial that although the asset belongs to such a class, it may, on the facts of a certain case, be acquired without the payment of money. That kind of case is covered by section 49 and its cost, for the purpose of section 48, is determined in accordance with those provisions. There are other provisions which indicate that section 48 is concerned with an asset capable of acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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