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1983 (6) TMI 53

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..... are devolved on the assessee and his wife. The assessee's wife Pannadevi herself died on 8-3-1971. On her death, as provided by the trust deed, her share of the income devolved on the assessee. During the previous year relevant to the year under appeal, the assessee assigned his 12.5 per cent share to Gopaldas Aggarwal, HUF, for a consideration of Rs. 49,500. In respect of this transaction, the assessee claimed a long-term capital loss of Rs. 74,500 which he computed by deducting from the consideration of Rs. 49,500, a sum of Rs. 1,24,000 which, according to the assessee, represented his beneficial interest as on 1-1-1954. The ITO recast the computation. According to him, the average income of property being in the neighbourhood of Rs. 10,0 .....

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..... able interest rates, etc., the computation of the market value as on 1-1-1954 by the ITO was correct. 4. In our view there is an obvious misconception about the whole transaction. That the original testator Tulsiram Devidayal made out a deed of trust and under the deed certain rights devolved on the assessee and his wife and subsequent to the latter's death further properties devolved on the assessee is not in dispute. Whether the assessee received or acquired some property which he sold off to the HUF during the year, thus, leading to a capital gain or a capital loss is a question to be explored. In our view the approach of both the assessee and the department in this regard seems to be rather confused. The assessee's claim is that he ha .....

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..... tly covered as it is by section 6 of the Transfer of Property Act, 1882. In other words, the assessee's claim that he had some asset granting that he can identify it on 1-1-1954 is without a basis. 5. The next is the question of the identification of the asset which is stated to have given rise to a capital gain or a capital loss. After the death of the assessee's wife, 12.5 per cent of the income devolved on the assessee which he is stated to have sold to the HUF. What the assessee's wife Pannadevi had received on the death of Mansadevi was her right to receive 12.5 per cent share in the property till her death. Certainly a right to receive income for a period is property, but that property is a wasting asset dependent on the life of the .....

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..... share of the trust income for as long as he lives. Certainly this is also an asset. The asset which he transferred during the previous year to the HUF perhaps could have been identified thus as a right of the assessee to receive 12.5 per cent of the income so long as he lives. This property inherited as it is by him has no original cost even if it is regarded as a capital asset. No capital gains or capital loss, therefore, can be computed on this in the light of the decision in CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294 (SC). 7. Even otherwise what the assessee has as a life interest is his right to get the income so long as he is alive. This is also like a wasting asset, a property which diminishes in value from time to time. Granti .....

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