Capital gains and remand compliance: written down value applied for cost, and no appeal lay from a consequential assessment.

For capital gains computation, written down value governed as the cost of acquisition where section 55(2) could not displace section 50 and the asset was not acquired in a mode covered by section 48; the fair market value as on 1 January 1954 was therefore unavailable, and the issue was decided for the Revenue. On maintainability, no appeal lay against a fresh assessment made strictly in compliance with remand directions where the computations were not in dispute and the assessment was merely consequential; the proper challenge, if any, was to the remand order itself, and this issue was also decided for the Revenue.

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Issues: (i) Whether, for computing capital gains, the assessee could adopt the fair market value as on 1 January 1954 instead of the written down value as the cost of acquisition; (ii) Whether an appeal before the AAC was competent against a fresh assessment made by the ITO strictly in compliance with remand directions where the computations were not in dispute.

Issue (i): Whether, for computing capital gains, the assessee could adopt the fair market value as on 1 January 1954 instead of the written down value as the cost of acquisition.

Analysis: The governing provisions were section 55(2) and section 50 of the Income-tax Act, 1961, read with section 48. The Court applied the earlier binding view that section 55(2) does not override section 50, and that where the asset was not acquired in one of the modes contemplated by section 48, the option to take fair market value was unavailable. In such a case, written down value had to be taken as the cost of acquisition.

Conclusion: The question was answered in the affirmative, in favour of the Revenue and against the assessee.

Issue (ii): Whether an appeal before the AAC was competent against a fresh assessment made by the ITO strictly in compliance with remand directions where the computations were not in dispute.

Analysis: The Court proceeded on the Tribunal's finding that the ITO had only carried out the AAC's remand directions and had not made any independent order beyond them. In that situation, the assessee had no right of appeal against the consequential assessment order; the proper challenge, if any, lay against the remand order itself. As the finding that the ITO had acted within the remand order was not successfully referred for consideration, no appellate right arose on the facts found.

Conclusion: The question was answered in the negative, in favour of the Revenue and against the assessee.

Final Conclusion: Both referred questions were decided against the assessee, and the department succeeded on the capital gains issue as well as on the maintainability of the appeal.

Ratio Decidendi: For capital gains computation, written down value governs where section 55(2) cannot displace section 50 and the asset was not acquired in a mode covered by section 48; and no appeal lies from a merely consequential assessment made in strict conformity with a remand order.

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