TMI Blog2011 (1) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... MR. JUSTICE ALOK SINGH, JJ. Mr. T.K.Joshi, Advocate for the petitioner/Revenue. Mr. Akshay Bhan, Advocate for the respondent/assessee. Adarsh Kumar Goel, J. 1. This matter has been placed before this Bench in pursuance of order of reference dated October 1, 2010 as under:- 1. Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh, arising out of its order dated 19.12.1994 in ITA Nos.301/Chd/90 and 404/Chd/92 for the assessment years 1977-78 and 1979-80:- Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assets which were the subject matter of capital gains were acquired by the assessee for nothing and that the same could not be subjected to capital gains? 2. The assessee sold certain plots for consideration and the income derived therefrom was sought to be taxed as capital gains . The CIT(A) reversed the view taken by the Assessing Officer, holding that cost of acquisition of property in question was nil and thus, no capital gain was attracted. The Tribunal upheld the said view, inter-alia, relying upon judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was acquired under the Instrument of Annexation and thus, its cost of acquisition could not be ascertained. Capital gain was attracted only when cost of acquisition was capable of being ascertained. This plea was rejected and the Assessing Officer proceeded to assess capital gain taking the cost of acquisition equal to the market value as on 1.1.1954/1.1.1964 depending on the dates specified under section 55(2) of the Act as applicable to the year of assessment. On appeal, the CIT(A) rejected the plea of the assessee that the cost of acquisition being incapable of ascertainment, no capital gain was attracted. However, the Tribunal reversed the said view following the judgment of the Hon ble Supreme Court in B.C.Srinivasa Setty s case (supra) and also earlier orders passed by the Tribunal in the cases of Amrinder Singh and Shiv Dev Inder . 3. Since at the time of hearing of the references before the Division Bench, reliance was placed upon a judgment of this Court in Amrik Singh s case (supra), prima facie, differing with the view taken therein, the matter was referred to be heard by a larger Bench. 4. Learned counsel for the revenue submits that the plea of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... malgamating company. xx xx xxx xxx 55(1) For the purposes of sections 48, 49 and 50 a) adjusted in relation to written down value or fair market value, means diminished by any loss deducted or increased by any profits assessed, under the provisions of clause (iii) of sub section (1), or clause (ii) of sub section (1A) of section 32 or sub section (2) or sub section (2A) of section 41, as the case may be, the computation for this purpose being made with reference to the period commencing from the Ist day of January 1954, in cases to which clause (2) of section 50 applies; b) cost of any improvement , in relation to a capital asset i) where the capital asset became the property of the previous owner or the assessee before the Ist day of January 1954 and the fair market value of the asset on that day is taken as the cost of acquisition at the option of the assessee, means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset on or after the said date by the previous owner or the assessee, and ii) in any other case, means all expenditure of a capital nature incurred in making any additions or alterations to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the previous owner acquired the property cannot be ascertained, the cost of acquisition to the previous owner means the fair market value on the date on which the capital asset became the property of the previous owner. 5. It is pointed out that judgment in CIT, Bangalore v. B.C.Srinivasa Setty s case (supra), is distinguishable. It was observed therein that in a newly started business the value of goodwill was not ascertainable, and on sale of goodwill, capital gain was not attracted. It is submitted that in case of acquisition of land, the same is either acquired at some cost or without cost and under the scheme of the Act, there can be no situation when the cost is incapable of ascertainment. Section 55(2) provides for taking the cost either equal to the market value as on 1.1.1954 or at the option of the assessee equal to the cost of acquisition of the previous owner. Section 55(3) provides that where cost of acquisition of the previous owner cannot be ascertained, it has to be taken to be equal to the market value on the date the asset was acquired by the previous owner. Explanation to section 49 provides that previous owner is the person not covered by the clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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