TMI Blog2001 (7) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... sion can amount to transfer; as to whether when an agricultural land is sold for use as house sites, it can be regarded as non-agricultural, and as to whether the cost of acquisition should be the cost of acquiring the agricultural lands or the market value as on the date the agricultural land is converted for use as land meant for use as house sites. The assessee had purchased 6.76 acres of land together with a factory and godown buildings, that factory and godown building being located in an area of about less than an acre, the remaining extent being open area on which some agricultural operations were continued to be carried on. The purchase was on February 11, 1959. Seven years later, the lands were sold after demarcating the open ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner, the assessee went up in appeal to the Tribunal. The Members of the Bench of the Tribunal which heard the appeal having disagreed about the manner in which the appeal should be disposed of, the matter was referred to a Third Member. In the course of the order made by the two members who had disagreed, it had been observed that, since the charge to capital gain arises only on the execution of a registered deed of transfer, the capital gain should be recomputed by taking into account only those transfers which are completed by registered deeds of transfer to the individual purchasers in the relevant previous years. On a rectification application filed by the assessee an order was made modifying the order which had been made earlier in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that decision, the court held that in the context in which it was used, "transfer" meant effective conveyance of the capital asset to the transferee and that delivery of possession of immovable property could not, by itself, be treated as equivalent to conveyance of the immovable property. Having regard to the law that prevailed in the relevant assessment year, we agree with counsel that capital gain can be regarded to have accrued only when the conveyance deed was executed and not at any earlier point of time. The Tribunal has rightly directed that the capital gain should be recomputed by taking into account only those transfers which were completed by registered deeds of transfer to the individual purchasers in the relevant previous ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied are those which are a part of the commercial practice or which an ordinary man of business will resort to when making computation for his business purposes. The principle of accounting indicated by us above are clearly the principles that must be applied in order to find out the net capital gain or loss arising out of a transaction of the nature with which we are concerned." The transaction with which the apex court was concerned in that case was one whereby a shareholder had renounced the right to acquire additional shares. The assessee's claim was that the profit that was realised by renounc ing the right would be a profit which she realised by renouncing the right to the additional shares and it must be set off against the loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the price which the assessee had paid for acquiring the property. Counsel contended that when the agricultural land was sold for the purpose of use as non-agricultural land, it amounted to the assessee bringing into existence a new asset and the date on which that asset was created was to be regarded as the date of acquisition, and the market value prevailing on that date should be treated as his cost of acquisition. In this contex counsel referred to the decision reported in CIT v. Bai Shirinbai K. Kooka [1962] 46 ITR 86 (SC). In the case relied on by counsel the court held that when a capital asset is converted into stock-in-trade and thereafter sold, the cost of acquisition should be taken with reference to the date on which the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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