Capital gains tax not chargeable where land had no ascertainable acquisition cost and computation provisions could not operate.

Capital gains tax was held not to apply where land was acquired by operation of law and no cost of acquisition could be ascertained. The court applied the principle that the charging provision and computation machinery for capital gains form an integrated code, so a transfer falls outside section 45 if the computation provisions cannot operate. Because the land had been vested through a declaratory decree under the Punjab Occupancy Tenants (Vesting of Proprietary Rights) Act, 1952, and no payment for acquisition was shown, the asset was treated as having no conceivable cost of acquisition, and capital gains tax was not payable.

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Issues: Whether capital gains tax was chargeable on the transfer of land acquired by the assessee by operation of law where the cost of acquisition was nil.

Analysis: The land was acquired through a declaratory decree under the Punjab Occupancy Tenants (Vesting of Proprietary Rights) Act, 1952, and no payment was shown to have been made for the acquisition. The Court applied the principle that the charging provision for capital gains and the computation provisions form an integrated code, and that a transaction does not fall within section 45 if the computation machinery cannot be applied. Where no conceivable cost of acquisition exists, the asset does not attract capital gains tax.

Conclusion: The assessee was not liable to pay capital gains tax.

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