Capital gains computation fails where cost of acquisition is unascertainable, so release deed consideration cannot be taxed.

Capital gains could not be charged on execution of a release deed where the assessee had no ascertainable cost of acquisition in the property. The computation provisions and the charging provision operate as an integrated code, so if cost of acquisition cannot be determined under the capital gains machinery, no taxable capital gain can arise. The deeming of consideration under section 50C could not cure that defect or override the absence of a computable acquisition cost.

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Issues: Whether long-term capital gain could be assessed on execution of a release deed when the assessee had no cost of acquisition in the property.

Analysis: The property had been acquired entirely at the cost of the other purchaser, and the assessee had not made any investment in it. The Court held that for capital gains to be taxed, the charging provision and the computation mechanism must operate together as an integrated code. Since the assessee's cost of acquisition could not be determined under the computation provisions, the capital gains machinery failed. The deeming of consideration under section 50C could not override the absence of a computable cost of acquisition.

Conclusion: Long-term capital gain was not chargeable in the assessee's hands, and the deletion of the addition was upheld.

Ratio Decidendi: Where the computation provisions for capital gains cannot be applied because the assessee has no ascertainable cost of acquisition, no charge to capital gains can be sustained.

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