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2011 (8) TMI 1085 - AT - Income TaxComputation of Capital Gain - Market value should be considered or not? - Assessee adopted lower price of Rs. 0.26 against the quotation of Bombay stock exchnage. Assessee contended that there is no provision in the Income tax to consider market value for the purpose of computing the capital gain - HELD THAT:- As per section 48, capital gain has to be worked out after reducing the cost of acquisition of capital asset along with cost of improvement thereto and the expenses incurred on transfer of a capital asset from full value of the consideration received or accruing as a result of the transfer of the capital asset. There is no reference to the market value of the capital asset transferred in section 48 or in any other section except section 50C, which is applicable only in case of sale of landed property. Ratio in the decision of COMMISSIONER OF INCOME TAX-II VERSUS GIRISH DAMJIBHAI PATEL [2011 (3) TMI 1593 - GUJARAT HIGH COURT] is this that for the purpose of working out capital gain, the sale consideration received by the assessee or accrued sale consideration has to be adopted because there is no reference in section 48 to the market value of the asset for the purpose of computing the capital gain. In that judgment, reference has been made to section 45(2) also where it is specified that market value of the asset in question has to be considered where there is conversion by the owner of the capital asset into stock in trade but it was held that provision of section 45(2) are not applicable in the case of sale of capital asset and the same is applicable where there is conversion of capital asset into stock in trade. Also, in the present case reasons for adoption of lower price of ₹ 0.26 per share against the quotation at Bombay Stock Exchange of ₹ 1.52 per share is also given by assessee. Respectfully following this judgment and considering the facts of present case, we are of the considered opinion that for the computation of capital gain in the present case, the A.O. shall work out the capital gain/capital loss on the basis of consideration received by the assessee and not on the basis of alleged market value of the shares sold by the assessee. We direct the A.O. accordingly -Decision in favour of Assessee.
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