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Issues involved: The judgment involves the deletion of capital gains from the total income of the assessee, based on the interpretation of relevant provisions of the Income-tax Act.
Summary: The High Court of Madhya Pradesh considered a case where the Tribunal deleted capital gains amounting to Rs. 1,03,609 from the total income of the assessee. The assessee had sold land and certain plots, resulting in capital gains. The Income-tax Officer assessed the capital gain, but the Commissioner of Income-tax (Appeals) deleted it, a decision upheld by the Tribunal. The Department challenged this deletion, leading to the present case. The Tribunal, in its decision, emphasized that the original owner had not incurred any cost towards acquisition, leading to the conclusion that no capital gain was chargeable. It was held that since there was no profit or gain arising from the transfer of the capital asset, it did not attract income tax under the head "Capital gains." The Tribunal relied on legal precedents and the provisions of Section 45(1) of the Income-tax Act to support its decision. The High Court, after considering the arguments presented, affirmed the Tribunal's decision to delete the capital gains. It concluded that when no profit or gain was realized from the transfer of the capital asset, there was no basis for charging income tax under the head "Capital gains." The Court ruled in favor of the assessee and against the Department, upholding the deletion of Rs. 1,03,609 from the total income. In conclusion, the High Court decided the reference application in favor of the assessee, confirming the deletion of capital gains, and directed the transmission of the order to the Tribunal.
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