Assessing officer's interest rate assumption dismissed in capital gain appeal. Deemed interest not considered in computation.

The appeal challenged the assessing officer's capital gain assessment based on interest rate difference, with the Tribunal ultimately dismissing the appeal. The assessing officer's assumption of an 18% interest rate without evidence was deemed unfounded, leading to the conclusion that no consideration was received for the transfer of the capital asset. Additionally, the court ruled that the deemed interest charged below market value could not be considered as consideration for the grant of a lease in the capital gain computation. The appeal was dismissed in favor of the Revenue.

---

---

Issues:
1. Interpretation of capital gain assessment on interest rate difference.
2. Consideration for grant of lease in capital gain computation.

Analysis:
1. The appeal challenged the Tribunal's decision allowing the assessee's appeal and setting aside the assessing officer's order assessing capital gain based on the difference in interest rates on a security deposit. The assessing authority considered the interest rate to be 18%, while the actual rate was stipulated at 9%. The main issue was whether the difference between these rates could be treated as capital gain. The Commissioner (Appeals) found that the assessing officer did not provide evidence to support the assumption that the interest rate should be 18%, and there was no basis to assume and compute consideration for transfer and cost of acquisition without evidence. The Tribunal held that all conditions for charging capital gains under sections 45 and 48 were not fulfilled, as no consideration was received in lieu of the transfer of the capital asset, resulting in the dismissal of the appeal.

2. The court considered whether the capital value of the deemed interest charged at a rate lower than the market value could be considered as consideration for the grant of a lease in the computation of capital gain. Sections 45(1) and 48 were analyzed, emphasizing that no provision deems profit or gain to be taxable as capital gain unless specifically included by the Legislature. The court referred to a judgment stating that unless a benefit is made taxable, it cannot be regarded as income. It was concluded that the mere difference in interest rates could not render the assessee liable for being taxed on the amount as capital gain. Additionally, a Division Bench judgment highlighted the relevance of the market rate of interest on deposits for determining adequacy, not the rate on borrowings. The court found no grounds to interfere with the impugned order in favor of the Revenue, dismissing the appeal.

---