Capital gains tax on import licence transfers turns on whether the asset had any monetary acquisition cost.

Capital gains tax applies only where the transferred capital asset had an ascertainable monetary cost to the assessee. An import licence acquired without any cost in money was treated as falling outside the charge to capital gains, and the earlier interpretation of the relevant statutory expression was applied beyond goodwill, copyright and trademark to other capital assets as well. On that reasoning, transfer of the import licence did not generate taxable capital gains, and the issue was decided in favour of the assessee.

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Issues: Whether the profit arising from transfer of an import licence attracted capital gains tax when the licence had been acquired without any cost in terms of money.

Analysis: The reference turned on the principle that capital gains apply only where the transferred asset has an actual cost to the assessee in monetary terms. The finding of fact was that the assessee incurred no cost in money in acquiring the import licence. The Court applied the earlier ruling which construed the expression relating to actual cost as requiring monetary cost and held that the principle was not confined to goodwill, copyright or trademark, but extended to other capital assets as well. Since the statutory language relevant to the point was treated as identical, the same reasoning governed transfer of the licence.

Conclusion: The transfer of the import licence did not give rise to taxable capital gains, and the question was answered in favour of the assessee.

Ratio Decidendi: Capital gains tax is attracted only where the capital asset transferred had an ascertainable cost in terms of money to the assessee; an asset acquired without such monetary cost does not fall within the charge.

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