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TMI Blog2015 (1) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... raj Goud, Chikkadapalli. He further noted that the property was purchased by assessee and Shri Balaraj Goud on 23/06/04( for a consideration of Rs. 15 lakhs) from Smt. K. Vijaya and two others. However, the transaction was not recorded in the books of assessee. During the assessment proceeding, assessee was summoned and a statement was recorded from him on 19/12/09. When assessee was asked to explain on the purchase transaction of the property in question, it was stated by him that the property was purchased by Shri Balaraj Goud and assessee's name was included in the transaction only for the purpose of security to Shri Krishana Rao Kesav, the GPA Holder, though, assessee did not pay any amount. It was stated by assessee, after a period of one year or thereabout when the entire amount was paid by Shri Balaraj Goud to Krishna Rao Kesav, release deed was executed in favour of Shri Balaraj Goud without any consideration and entire property was transferred in his name. It was further stated by assessee that as he neither made any payment towards purchase of the property nor he received any consideration while executing release deed, he did not disclose the transaction to the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee and Shri Balaraj Goud. However, in an appeal preferred by assessee, the addition made was deleted and the entire sale consideration including registration charges was treated as investments being made by Shri Balaraj Goud alone and in fact the entire amount of Rs. 19,47,680 was assessed at the hands of Sri Balraj Goud. Thus, it was submitted by assessee that since there is no cost of acquisition to assessee as the entire sale consideration of Rs. 15 lakh was paid by Shri Balaraj Goud alone, computation provision fails, accordingly capital gain cannot be assessed at the hands of assessee. In support of such contention, assessee relied upon a decision of Hon'ble Supreme Court in case of CIT Vs. Shri B.C. Srinivasa Shetty, 128 ITR 294. 5. Ld. CIT(A) after considering the submissions of assessee in the light of facts and materials available on record, deleted the addition on account of LTCG amounting to Rs. 70,45,443 by holding as under: "6. I have carefully considered the appellant's submissions. The issue for consideration is whether there is a transfer arising out of release deed dated 23/06/2008 executed by appellant in favour of B. Balraj Goud for the purpose of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by assessee. 7. Ld. AR, on the other hand, reiterating the submissions made before the departmental authorities contended that in the sale deed assessee's name was mentioned only for security purpose, but, in reality assessee never paid any sale consideration to the vendor. It was submitted that MoU dated 03/06/04 clearly establishes this fact as in the MoU, assessee is not made a party and only Shri B. Balaraj Goud is a party. It was submitted by ld. AR that Shri B. Balaraj Goud alone has paid entire sale consideration of Rs. 15 lakh along with registration charges is proved from the fact that not only the entire investment has been assessed at the hands of Shri B. Balaraj Goud, but, 50% of sale consideration assessed at the hands of assessee was deleted in appeal by ld. CIT(A). It was submitted that from the aforesaid facts, it is clearly proved that the property was purchased by Shri B. Balaraj Goud alone and assessee was merely a name lendor for safety purpose. Ld. AR submitted that only for regularizing ownership of the property in the name of Shri B. Balaraj Goud, release deed was executed by mentioning the sale consideration of Rs. 20 lakh, even though in reality, assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for determining the chargeable profits and gains. All transactions encompassed by s. 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by s. 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the IT Act, where under each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise, one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind that the legislative intent is presumed to run unif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have already been detailed. In such a case, when the asset is sold and the consideration is brought to tax, what is charged is the capital value of the asset and not any profit or gain. 9. In the case of goodwill generated in a new business there is the further circumstance that it is not possible to determine the date when it comes into existence. The date of acquisition of the asset is a material factor in applying the computation provisions pertaining to capital gains. It is possible to say that the "cost of acquisition" mentioned in s. 48 implies a date of acquisition, and that inference is strengthened by the provisions of ss. 49 and 50 as well as sub-s. (2) of s. 55. 10. It may also be noted that if the goodwill generated in a new business is regarded as acquired at a cost and subsequently passes to an assessee in any of the modes specified in sub-s. (1) of s. 49, it will become necessary to determine the cost of acquisition to the previous owner. Having regard to the nature of the asset, it will be impossible to determine such cost of acquisition. Nor can sub-s. (3) of s. 55 be invoked, because the date of acquisition by the previous owner will remain unknown." 9. The pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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