2009 (6) TMI 6 - HC - Income Tax

Sale of Capital Assets Cost of improvement property held by assessee was declared as capital goods by notification dated 6-1-2004 date of acquisition was before 1-4-1981 - computation of capital gain under section 55(2) - the contention of the assessee that the value of the asset should be as on the date of the notification when it became a capital asset cannot be accepted - the valuation report of the expert was not accepted by the Tribunal. Admittedly the assessee did not seek any such reference either before the first appellate stage or before or before the Tribunal. It is only at the appellate tribunal stage that such a contention was raised. The appellate tribunal considered the matter and rejected the same. No substantial question of law much less a substantial question of law arises for consideration in this appeal. We find no merit in the appeal and it is dismissed.

Summary

The High Court of Kerala delivered a judgment in 2009 regarding the computation of the cost of acquisition/fair market value of the appellant's property. The main issue in question was whether the cost of acquisition should be based on the date of the notification declaring the asset as a capital asset (6.1.1994) or on 1.4.1981 as per Section 55(2)(b) of the Income Tax Act. The court ruled that the cost of acquisition should be calculated as of 1.4.1981, which includes all expenditure of a capital nature incurred in making any additions or alterations to the asset. The court referred to a previous bench decision to support this interpretation. The judgment emphasized that the charge of income tax on capital gains is based on the property being a capital asset at the time of transfer, not necessarily at the time of acquisition. The court also dismissed the appellant's argument regarding the valuation report of an expert, as it was not raised at earlier stages and no substantial question of law arose. The appeal was subsequently dismissed.