TMI Blog1994 (8) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the assessability in the year in which acquisition took place, viz., 1972-73 ? 3. Whether the Tribunal was right in holding that notwithstanding that section 3 of the Acquisition Act itself does not make any mention of permits while listing the assets that vest with the Government, yet there was a transfer of unexpired permit within the meaning of section 2(47) ? 4. Whether the Tribunal was right in its conclusion that the compensation of Rs. 56,82,378.47 determined in subsequent previous year as payable to the assessee for the vesting of the undertaking with the Government should be taken as the full value of consideration for computation of capital gains under section 48 and other purposes and that the deduction made for gratuity liability therefrom should be ignored? 5. Whether the Tribunal was right in holding that the sum of Rs. 14,714 representing the excess value of stores and cost had been correctly assessed to capital gains in the assessment year 1972-73 ? " Question referred to us in Tax Case No. 1301 of 1981 : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the application fees and other i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28, 1972, and since the assets have been transferred to the Government on February 28, 1972, which falls within the accounting year, section 41(2) profits have been correctly assessed by the Income-tax Officer. Aggrieved, the assessee filed an appeal before the Tribunal. The Tribunal held that whether the acquisition is acquisition or compulsory acquisition the legal consequences are the same. The second contention of the assessee that there is no compulsory acquisition "under any law for the time being in force" is rejected. The Tribunal held that the compensation was not a lump sum payment but attributable to each and every item of stock-in-trade of the assessee. Since the compensation was determined and paid for each and every item of the assets belonging to the transport business of the assessee the decision of the Supreme Court reported in 57 ITR 298 (sic) will not apply to the present case. According to the Tribunal, in the present case, the assets sold are those in respect of which depreciation allowance has been granted and the other requirements under section 41(2) are also satisfied. Hence, section 41(2) profits have been correctly assessed. The Tribunal also held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent without allowing any deduction represents the full value of the consideration. The Tribunal further held that the gratuity liability amounting to Rs. 3,30,547 cannot be deducted from the compensation of Rs. 56,82,378.47 while arriving at the full value of the consideration. On acquisition the value received for stores amounted to Rs. 3,97,836 while the cost to the assessee was Rs. 3,82,122. The difference between these two amounts amounting to Rs. 15,714 was assessed to capital gains tax. Before the Tribunal, the assessee contended that the compensation payable to the assessee was not determined in the accounting year relevant to the assessment year 1972-73 and, consequently, the capital gains on the value of stores is not assessable to tax for the assessment year 1972-73. However, the Tribunal held that the sum of Rs. 15,714 is assessable under the head "Capital gains" for the assessment year 1972-73. We will consider first the question referred to us at the instance of the Department in Tax Case No. 1301 of 1981. According to the Revenue, the Appellate Tribunal was not right in law in holding that the application fees and other incidental expenses incurred in connection w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf-generating asset and it will not have any cost of acquisition and hence the matter was remitted to the Tribunal for ascertaining the cost of acquisition and determining the capital gains". On the other hand, learned counsel appearing for the assessee, in order to support his contention, relied upon a decision of the Andhra Pradesh High Court in the case of Addl. CIT v. Ganapathi Raju Jegi, Sanyasi Raju [1979] 119 ITR 715, wherein it was held that "where when the route permit was granted, no amount was paid by the operator for the purpose of acquiring it and it is only over a number of years because of various factors, viz., the development of roads, passenger traffic, the frequency of the buses plying on the road, that the permit acquires some value, the value of the route permit cannot be evaluated as on the date of the acquisition. In such a case where the cost of acquisition of a particular asset is nil especially when the capital asset is the creation of the assessee by his own effort, the case will be similar to that of a sale of goodwill by the assessee and the consideration in terms of money realised on the transfer of the said capital asset cannot be brought to capita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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