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TMI Blog1985 (12) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... stry. That report was prepared by him in the year 1971 when he was serving with some other company and had been submitted by him to financial institutions, who did not initially consider the project financially viable. However, in 1975 the financial institutions considered the said project to be financially viable, with the result that Trition Valves Ltd., of which the assessee was managing director, adopted the said project report and paid Rs. 43,000 as price for the same to the assessee. The said company treated the said expenditure as capital outlay. 2. In part III of the return of income the assessee made a mention about the receipt of the said amount of Rs. 43,000 and in the explanatory note he claimed exemption under section 10(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset being the project report. He then went into the question whether the said capital asset, viz., the project report had any cost of acquisition. He observed that the project report could not have come out from nowhere and that the assessee must have spent his time and he must have incurred expenditure in the preparation of the said report. He, therefore, came to the conclusion that the said capital asset had cost of acquisition. However, since the assessee did not give details of cost of acquisition, he treated the cost as nil, only for the purpose of computation of the capital gain. He, accordingly, treated the amount of Rs. 43,000 as capital gains and after giving deduction of Rs. 20,200 under section 80T of the Act brought th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said company. On these facts, which formed common ground in the proceedings before the authorities below the only question that would survive for decision is whether the provisions relating to capital gains would be attracted. On these facts, we have no doubt that the said capital asset had been transferred by the assessee in favour of the said company and the amount in question had been received by the assessee as consideration for the said transfer. The submission before us on behalf of the assessee was that the said capital asset had no date of acquisition or cost of acquisition and as such, provisions regarding computation of capital gains would not be applicable. with the result that capital gains could not be charged. We are unable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AAC on this point. We hold that the capital asset involved in the present case had a definite date of acquisition and also cost of acquisition. Consequently, there was no difficulty in computing the capital gains and surplus arising out of transfer of the said capital asset was taxable to capital gains tax. 6. The assessee did not file details of expenses in acquiring the said capital asset before the ITO because the assessee took the stand that the provisions of capital gains tax were not attracted. Since there were no details on record, the ITO treated the cost of acquisition as nil. We are of the opinion that the ITO had erred in treating the cost of acquisition as nil for the purpose of computing the capital gains. He should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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