TMI Blog1990 (12) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... D. Nirgudkar, ITO Anr. (1981) 22 CTR (Bom) 41 : (1981) 128 ITR 87 (Bom). He also raised the further contention that the land in question was purchased by his father; that his father died intestate on 14th Oct., 1970; and that, consequently, the land in question was inherited not only by himself but also by his mother and sister. 4. On the eligibility issue, the ITO held that the capita gains arising out of the land in question was chargeable to tax. In this connection he relied on the Gujarat case of Ambalal Mangalal vs. Union of India Anr. (1975) 98 ITR 237 (Guj). 5. The ITO also rejected the assessee's alternative claim that only 1/3rd share in the capital gains could be brought to tax in his hands. In this connection, he relied on the circumstances that in the order passed on 31st Aug., 1982 by the Hon'ble Judge compensation of Rs. 3,52,759 was awarded only to the assessee. 6. In view of the foregoing, therefore, the ITO brought to tax in the hands of the assessee the capital gains arising out of the land acquired by the Tamil Nadu Housing Board. 7. On his part of CIT(A) held first that capital gains arising on the sale of agricultural lands is exigible to tax. Secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 989) Taxation 95 (4) 66. Alternatively, the contended that the assessee was rightly given the benefit of taking into account the fair market value of the property as on 28th Feb., 1970 for the purpose of computing capital gains. Besides relying upon the decision of he Tribunal Chandigarh Bench in the case of Gurjit Singh Mansahia, he contended that there was no question of taking the 1st Jan., 1964 value because on that date no tax was leviable on the capital gains arising on the sale of agricultural lands. 13. Shri Balakrishnan then made a faint attempt to argue that the solarium received should be left out the reckoning for purposes of computing capital gains. It must, however, be recorded that he did not cite any authority for this proposition. 14. Turning next to interest under s. 139(8) Shri Balakrishnan contended that this issue was rightly decided by the CIT(A) in favour of the assessee. He also referred to and relied upon the recent decision of the Patna High Court in Praksh Lal Khandelwal vs. ITO Anr. (1990) 81 CTR (Pat) 334 : (1989) 180 ITR 604 (Pat). 15. On his part Shri Nataraja, the learned Deptl. Representative, strongly supported the impugned order of the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xclusively in connection with such transfer and (ii) the cost of acquisition of the capital asset and the cost of any improvement thereto. Under s. 49 of the act where the capital asset become the property of the assessee, inter alia, by succession, inheritance or devolution, the cost of acquisition of the asset is deemed to be cost for which the previous owner of the property acquired it as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. Normally, the matter should have ended there. However, s. 55(2) of the Act incorporates certain provisions beneficial to the assessee. We are here concerned with s. 55(2)(ii), which stipulates that where the capital asset became the property of the assessee, inter alia, by succession, inheritance or devolution and the capital asset become the property of the previous owner before 1st Jan., 1964, the cost of acquisition of the assessee would mean the cost of the capital asset to the previous owner or at option of the assessee the fair market value of the asset as on 1st Jan., 1964. 22. The aforesaid provision is really in the nature of a bounty of the legislature. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition that obiter of one Bench would be binding on another. 26. Secondly, the supreme Court decisions referred to supra dealt with cases in which assets held as investment were converted into stock-in-trade and the question arose as to how the assets in question should be valued for purposes of computing the profits arising out of their sale. It was in that context that the supreme Court held that the fair market value of the assets in question on the date of their conversion into stock-in-trade must be taken into account. 27. We are, however, concerned with computation of capital gains. What is more significant, as pointed out earlier the scheme of the Act relating to the computation of capital gains has no room for any date other than 1st Jan., 1954 or 1st Jan., 1964 or 1st Jan., 1974, as the case may be. 28. There is yet another point that is noteworthy. For the purposes of ascertaining, at the option of the assessee, the fair market value as on 1st Jan., 1954/1st Jan., 1964/1st Jan., 1974 the nature of the property is irrelevant. This was the position obtaining even before the amendment of s. 2(14) of the act by the finance Act, 1970. Thus, in the case of Ranchhodbhai Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i). The only justification which could be put forward on behalf of the assessee for reading the section in this manner was that the legislature could not have interred that the appreciation in value which look place whist the property was non-capital asset should be subjected to tax which would be the inevitable result if we read the section as referring to the cost to which the assessee was put in acquiring the property. But this is a wholly erroneous approach in construing a statutory provision. The intention of the legislature must be gathered from the words used; it is well settled that what is unexpressed by the legislature must be taken as untended, we cannot presume a certain intention on the part of the legislature and then bend the language of the section with a view to making it accord with such presumed intention. The contention of the assessee also stands refuelled by the language of s. 55(2), cl. (i). The property which is transferred could become the property of the assessee only at one point of time. It could not become the property of the assessee as non-capital asset at one point of time and as capital asset at another point of time. The argument of the assessee wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital asset. There is no further implication. The section does not say that the subject of the transfer must have been a capital asset at any other point of time. Conversely, the change under s.45 does not become exigible where the subject of transfer is a non-capital asset. It is not a further requirement for immunity from taxation that the non-capital asset in question must also have been a non-capital asset at the time of its acquisition or any other material time. In other words, taxation or exemption from taxation depends upon the subject of transfer answering or not answering the definition of capital asset at the time of transfer and at not other point of time...." 31. In this regard the Madras High Court followed the decision of the Gujarat High Court in the case of Ranchhodbhai Bhaijibhai Patel. 32. We also have the Kerala case of Smt. Subaida Beevi in which the Kerala High Court followed the aforesaid decision of the Gujarat and Madras High Courts. In view of the foregoing, therefore, we hold that under the scheme of the Act there is no room import the date of 28 th Feb., 1970. We further hold that the CIT(A) was not justified in allowing the assessee's claim on this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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