TMI Blog1999 (9) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... Long Term Capital Gains of Rs. 9,08,814. The Long Term Capital Gains was determined by the Assessing Officer as under : At the time of discussion the assessee's representative has produced a copy of the valuation report of the approved valuer, Vumidi Bangaru Chetty Trust dated 2-3-1978. The valuation report covers all the jewelleries including diamond and silver articles. Since the value considered for assessment for the assessment year 1981-82 was an appreciation on the entire value considered in the valuation report of the approved valuer without any specific value in respect of each item of jewellery, he argued that the cost of jewellery as on 1-4-1981 has to be worked out on the proportionate value of the transferred asset based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal and applying the indexed cost worked out the cost on the basis of the value considered in the revision order for the assessment year 1981-82. The proportionate value of the assessee's share was taken first out of the total value determined by the valuer in his report dated 2-3-1978 and also proportionate value of the value considered for 1981-82 in the wealth-tax revision order in arriving at the cost as on 1-4-1981. On that basis index cost was arrived at for the assessment year 1994-95. By this process the capital gains worked out to Rs. 9,08,814 as against the loss of Rs. 12,09,090. 3. The assessee was aggrieved and moved the matter in appeal before the first appellate authority, who also dismissed the assessee's appeal. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... father of the appellant had life interest in the estate that passed on to the appellant through the will left by Sri Arokiasamy Mudaliar. The Income-tax Appellate Tribunal allowed discounting factor for determining the value for wealth-tax purposes which has no relevance for determination of the cost as on 1-4-1981 for Capital Gains purposes. The Tribunal had given the discounting factor considering the fact that there was court seal owing to long drawn litigation and that possession and enjoyment was thus in jeopardy. This fact is nothing to do with determination of cost to the previous owner pegging it as on 1-4-1981 as envisaged by the fiction created by section 49 of the Income-tax Act. The litigation was over when the sale has taken pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d contended that adopting the value determined for wealth-tax purposes as the basis was correct. He relied on the following judicial pronouncements : (i) CIT v. Segu Buchiah Setty [1970] 77 ITR 539 (SC) (ii) CST v. H.M. Esufali H.M. Abdulali [1973] 90 ITR 271 (SC). (iii) CIT v. British Paints India Ltd. [1991] 188 ITR 44/54 Taxman 499 (SC). 6. We have heard rival submissions and perused the facts and materials on record including the submissions and judicial pronouncements cited by both the parties. It is an undisputed fact that the assessee got jewellery by will and sold the same to a Bombay party. While arriving at the capital gains on such jewellery, the assessee by virtue of section 49 of the Income-tax Act, 1961 while deducting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the wealth-tax purposes, the Tribunal due to the specific situation prevalent during that relevant assessment year had given a discount of 60% because the jewellery were in the court custody due to the civil suit and also under joint ownership. But the very fact that the assessee sold the jewellery during the assessment year 1994-95 clearly shows that the deterrence on the property like joint ownership, court custody, etc. etc. had been lifted and no where existed, i.e., the property was free from encumbrance on the date of sale. Further, when the Income-tax Act gives option to the assessee to adopt the fair market value as on 1st day of April, 1981 as the cost of the property sold, it is to be construed that the Act means the market value ..... X X X X Extracts X X X X X X X X Extracts X X X X
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