TMI Blog1993 (9) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... y 1, 1954, as contended by the Department or as on March 1, 1970, as contended by the assessee ?" The facts of this case are in a very narrow compass, so also is the controversy. The assessee transferred agricultural land admeasuring 5,308 sq. yards during the previous year relevant to the assessment year 1972-73. The transfer took place on June 17, 1971. The admitted position is that agricultural land was not included within the definition of "capital asset" till April 1, 1970. It was only by the Finance Act, 1970, that with effect from April 1, 1970, certain agricultural lands in India specified in subclause (iii) of clause (14) of section 2 of the Act were included in the definition of "capital asset". There is no controversy in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gain arises, such capital gain has to be computed in the manner laid down in sections 48 and 49 of the Act and for that purpose the date of acquisition will be the date when the asset was acquired by the assessee and not the date when the asset became taxable under the Act. We have heard learned counsel for the assessee. Section 45 of the Act provides for levy of income-tax on the profits and gains arising from the transfer of a capital asset effected by the assessee in the previous year. It is also specifically provided in the said section that the income shall be deemed to be the income in the previous year in which the transfer, took place. Section 48 of the Act deals with the mode of computation of income chargeable under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt from the decision of the Gujarat High Court in Ranchhodbhai Bhaijibhai Patel v. CIT [1971] 81 ITR 446. In that case also, similar argument was sought to be advanced by the assessee. Repelling the contention of the assessee, it was observed as under (at page 458) : " . . . These words [the cost of acquisition of the capital asset] emphasise two aspects : one is 'acquisition' and the other is 'cost'. The reference clearly is to the point of time when the capital asset is acquired and the cost of such acquisition is required to be deducted from the full value of the consideration . Where the property transferred was not a capital asset at the date of acquisition but subsequently became a capital asset as in the present case, it is difficu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of time and as a capital asset at another point of time. The argument of the assessee would require us to introduce a legal fiction also in section 55(2), clause (i). We would have to assume that when a property which was non-capital asset becomes a capital asset, it is deemed to become the property of the assessee for the purpose of section 55(2), clause (i). Such a construction would do violence to the language of section 55(2), clause (i), and would be clearly impermissible on any recognised canon of construction. Then again it is apparent from sections 49, 51 and 55(3) that the words 'the cost of acquisition of the capital asset', 'the cost for which the asset was acquired' and 'the cost for which the previous owner of the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 86 and Miss Dhun Dadabhoy Kapadia v. CIT [1967] 63 ITR 651 in support of his contention that commercial principles should be followed by the courts in determining the capital gains for the purpose of taxation. We do not think that the above decisions are of any relevance in deciding the question at issue before us. The provisions in the Act as to the mode of computation of capital gains, the cost of acquisition thereof, etc., being clear, it is not open to us to ignore the said provisions and take resort to some general principles. This view of ours gets full support from the decision of the Supreme Court in State Bank of Travancore v. CIT [1986] 158 ITR 102, wherein Sabyasachi Mukharji J. (as he then was) dealing with the concept of " ..... X X X X Extracts X X X X X X X X Extracts X X X X
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