TMI Blog2011 (8) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee or accrued sale consideration has to be adopted because there is no reference in section 48 to the market value of the asset for the purpose of computing the capital gain. In that judgment, reference has been made to section 45(2) also where it is specified that market value of the asset in question has to be considered where there is conversion by the owner of the capital asset into stock in trade but it was held that provision of section 45(2) are not applicable in the case of sale of capital asset and the same is applicable where there is conversion of capital asset into stock in trade. Also, in the present case reasons for adoption of lower price of ₹ 0.26 per share against the quotation at Bombay Stock Exchange of ₹ 1.52 per share is also given by assessee. Respectfully following this judgment and considering the facts of present case, we are of the considered opinion that for the computation of capital gain in the present case, the A.O. shall work out the capital gain/capital loss on the basis of consideration received by the assessee and not on the basis of alleged market value of the shares sold by the assessee. We direct the A.O. accordingly -Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice is adopted to personally benefit the directors and therefore applying the rate of 1.52 the suppression in sales was computed at ₹ 4,19,504/-. 4. Thereafter, the assessee carried the matter in appeal before the Ld. CITA (A) but without success and now the assessee is in further appeal before us. 5. It is submitted by the Ld. Counsel of the assessee that even if this allegation of the A.O. is accepted that the transaction is between the two related parties and the market value of the shares in question was more than sale price adopted by the assessee at 0.26 per share, there is no provision in the Income tax Act to consider market value for the purpose of computing the capital gain. It was submitted that section 50C has been introduced in the Statute Book w.e.f. 1-4-2003 but that is applicable in the case of sale of a capital asset being land or building or both but the capital asset in the present case is share and not land or building or both and hence the provisions of section 50C are not applicable in this case. It is submitted that for the purpose of computing the capital gain, the provisions of section 48 are applicable as per which, the income chargeable unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no market value of the shares available in that case but in the present case, the shares in question are of a quoted company and market value of such shares is available as per the quotation in the Stock Exchange on the relevant date and hence, this Tribunal decision is also not applicable in the present case. It was submitted that the ratio of the judgment of Hon ble apex court in the case of Mcdowell Co. Ltd. vs. C.T.O. as reported at 154 ITR 148 (SC) should be followed. In the rejoinder, it was submitted by the Ld A. R. of the assessee that the ratio of the judgment of Hon ble apex court in the case of Mcdowell Co. Ltd. vs. C.T.O. (supra) is not a good law after the subsequent judgment of the Hon ble Apex Court in the case of Union of India Another vs. Azadi Bachao Andolan Another as reported in 263 ITR 706 (SC). 7. We have considered the rival submissions, perused the material on record and have gone through the orders of the authorities below as well as the judgments cited by both the sides. We find that as per section 48, capital gain has to be worked out after reducing the cost of acquisition of capital asset along with cost of improvement thereto and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the capital asset into stock in trade but it was held that provision of section 45(2) are not applicable in the case of sale of capital asset and the same is applicable where there is conversion of capital asset into stock in trade. It was noted by Hon ble Gujarat High Court in paragraph 19 that counsel for the Revenue was unable to point out any other provision in which in a situation like the present case, the Assessing Officer could have made a reference to a valuer for ascertaining the fair market value of the assets in question as on the date of its transfer In the present case also, no provision in the Income tax Act has been brought to our notice as per which, market value can be considered for the purpose of computation of capital gain. Regarding the reliance placed by Ld. D.R. of the Revenue on the Judgment of Hon ble apex Court rendered in the case of Mcdowell Co. Ltd. vs. C.T.O. (supra), we find that in that case, the issue involved was regarding legal tax planning or Tax avoidance. In the present case, we find that even after addition made by the A.O. of ₹ 4,19,504/-, the loss assessed by the A.O. is of ₹ 28,23,396/-. The facts of the present case does n ..... 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