Cost of acquisition estimate and denial of indexation upheld where base-date proof for inherited books was absent.

Where assessees could not prove the cost of inherited library materials as on 01.04.1981, the authorities were entitled to estimate the acquisition cost on the date of sale. Once cost was fixed on that basis, indexation under section 48 of the Income-tax Act, 1961 did not arise. The appellate estimate was held reasonable, and there was no basis to seek further enhancement in appeal. As the dispute rested on factual estimation of cost and not on any substantial question of law, no interference under section 260A was warranted.

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Issues: Whether the assessees were entitled to adopt the cost of the inherited library materials as on 01.04.1981 and claim indexation under section 48 of the Income-tax Act, 1961, and whether the estimated cost fixed by the authorities required further enhancement.

Analysis: The assessees failed to produce any material to establish the cost of acquisition of the books as on 01.04.1981. In the absence of such proof, the authorities were justified in estimating the cost of acquisition on the date of sale. Once the cost was fixed on the date of sale, the question of applying indexation did not arise. The estimate made by the appellate authority was found to be reasonable, and no basis existed for substituting another estimate in appellate jurisdiction. The dispute turned on factual findings based on estimate and did not disclose any substantial question of law under section 260A of the Income-tax Act, 1961.

Conclusion: The claim for indexation was rejected, the further enhancement of estimated cost was declined, and the findings were upheld in favour of the Revenue.

Final Conclusion: The appeals were dismissed as no substantial question of law arose from the factual findings on estimation of cost of acquisition.

Ratio Decidendi: Where the assessee fails to prove the cost of acquisition as on the relevant base date, the authorities may estimate the cost, and such factual estimation will not ordinarily give rise to a substantial question of law for interference under section 260A of the Income-tax Act, 1961.

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