TMI Blog2009 (9) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the Assessing Officer found that the fuel station was sold through an agreement dated September 23, 1998 with effect from May 27, 1998. The full consideration of Rs. 82 lakhs was received by the assessee as per the agreement dated December 20, 2000. The explanation of the assessee before the Assessing Officer was that the earlier statement made by him that the fuel station as a whole was sold and disposed of was not fully correct. He explained that the land alone was sold for a consideration of Rs. 12.5 lakhs and the sale of fuel station was yet to take place. But the subsequent version was not accepted by the assessing authority especially for the reason that the entire consideration of Rs. 82 lakhs had already been received by the assessee. He held that there was a transfer as defined in section 2(47) and the surplus arising out of the transaction would be liable for capital gains tax. He found out the surplus by working out the difference between the sale price and the value of assets as reflected in the latest balance-sheet along with the value of 49.100 cents of land separately considered. Ultimately, the Assessing Officer worked out the capital gains at Rs. 55,57,238. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset sold by the assessee could not be determined. The Commissioner of Income-tax (Appeals) observed that the expression "right to carry on any business" was inserted in the definition of "cost of acquisition" under section 55(2) with effect from April 1, 2003, alone, by the Finance Act, 2002. The said amendment is applicable from the assessment year 2003-04. Here the impugned assessment year is 1999-2000 included in the block period. The assessee's licence to run the fuel station is a right to carry on a business under licence and as it was not available in the statute as on the date of transfer, the transfer cannot be held to be a transfer of a capital asset. He further observed that the cost cannot be ascertained and therefore computation portion of the provision relating to capital gains taxation fail and there cannot be a levy of capital gains taxation in the light of the above judgment of the apex court. Accordingly, he deleted the addition of Rs. 55,57,248 made by the assessing authority by way of capital gains. The Revenue is aggrieved and therefore this appeal before us. The grounds raised by the Revenue in this appeal read as below: "2. The learned Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 ITR 793. 4. The learned Commissioner of Income-tax (Appeals) also erred in deleting the capital gains of Rs. 12,93,613 on the sale of land on which the petrol pump was situated, on the finding that no clinching evidence was there to show that the assessee had received consideration over and above what is stated in the registered sale deed. The Commissioner of Income-tax (Appeals) failed to note that the additions were made by the Assessing Officer on the basis of the statements recorded under section 132(4) from the assessee during the course of search. The Commissioner of Income-tax (Appeals) should have sustained the additions." We heard Shri A.K. Thattai, the learned Commissioner of Income-tax, appearing for the Revenue and Shri Thomson Thomas, chartered accountant appearing for the respondent-assessee. There is no doubt regarding the basic fact that the property of fuel station was sold by the assessee as a slump sale. The running of a fuel station is a business carried on the strength of the licence issued by the oil company, viz. M/s. IBP and Company Ltd. The business licence enjoyed by the assessee is in the nature of "right to carryon any business". Section 45 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputation provision. This position is to be read along with the introduction of enlarged expressions of assets in section 55(2) whereby "or right to carry on any business" was introduced by the Finance Act, 2002 with effect from April 1, 2003. Therefore, the identification of the right transferred by the assessee to be a capital asset itself was operative with effect from the assessment year 2003-04, whereas the transaction in the present case related to the assessment year 1999-2000. Therefore, in the light of the judgment of the Supreme Court in the case of CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294, it was not possible not only to conceive the right as a capital asset but also to operate the computing provisions of section 45. Therefore, on both counts, the transaction relating to the assessment year 1999-2000 cannot be subject-matter of capital gains taxation as the enabling amendments were brought with effect from the assessment year 2003-04 alone. In other words, the case of the assessee is strengthened by two propositions; one relating to the computation of cost of acquisition and the other one relating to the nature of the asset itself. The above positions stood alt ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
