TaxTMI 
TaxTMI 
2015 (10) TMI 2107
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....which was acquired by way of adverse possession and which did not involve any acquisition costs, can be subjected to the capital gains tax or not ? 3. Brief facts of the case are that the assessee, a partner in M/s Sandeep Industries, filed her return of income for the assessment year under consideration on 06-10-2006 declaring total income of Rs. 35,53,690. The income declared by the assessee included an amount of Rs. 34,23,165 being capital gains. 3. Subsequently the assessee filed a revised return of income on 31-03- 2008 wherein the capital gain declared in the original return of income was omitted on the ground that there was a mistake in treating the transaction of sale of 1/3 share of interest in land at Goregaon at Rs. 50,00,000/-....
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....s liable for capital gains tax on the basis of agreement dated 24.8.2005. (b) If yes; whether the provision of section 50C were applicable in view of the stamp duty authorities determining the value of transaction at Rs. 2,28.45,000/- . 4. Accordingly, the assessee was asked to file her submissions on the above issues. The assessee reiterated the statement made in the return of income as revised and contended that since the cost of acquisition of the assessee was nil, no capital gain tax was leviable. The assessee in this respect relied upon the following case laws: i) CIT vs. B.C. Srinivas Shetty, 128 ITR 294 (SC) ii) CIT vs. Manoharsinghji P. Jadeja, 281 ITR 19 (Guj.) iii) Cadell Wearing MSN Co. (P) Ltd. vs. CIT, 249 ITR 285(Bom) 273....
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....o be taxed as capital gain under section 45. 6. After coming to the -conclusion that sale of land by the assessee at Goregaon was liable for Long Term Capital Gain tax, the AO considered the application of section 50C of the Act. He observed that the stamp duty value of the property was Rs. 2,28,45,000/- whereas the deed was registered for Rs. 1.20 crores only. He rejected the contention of the assessee that the value adopted by the Stamp Duty Authorities exceeded the fair market value of the property on the date of transfer. The AO observed that the land in question was situated at a very prized location where it would fetch a much higher price than what was the stamp duty rate which was the average of land prices situated in the area. Th....
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....ar transaction, it must be regarded as "never intended by section 45 to be the subject of the charge". The Hon'ble Supreme Court in the case of 'PNB Finance ltd. vs. CIT (2008) 307 ITR 75' has reiterated the above proposition of law .In the case of CIT v. B.C. Srinivasa Shetty (supra) the court was considering whether a firm was liable to pay capital gains on the sale of its goodwill to another firm. The court found that the consideration received for the sale of goodwill could not be subjected to capital gains because the cost of its acquisition was inherently incapable of being determined. The principle propounded in B.C. Srinivas Shetty (1981) 128 ITR 294 (SC) has been followed by several High Courts with reference to the consideration r....
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....ncluded. Though the Parliament has made an amendment that in certain type of assets like goodwill, tenancy rights etc., the cost of acquisition would be taken as actual cost incurred and if no cost incurred, the same be taken at nil, however the said deeming section is applicable to the assets which have been specifically brought within the purview of the said provision. The assets or the rights which do not find mention in the relevant provision, cannot be brought within the ambit of charging section, in the light of the decision of the Hon'ble Supreme Court. We further find that the issue is now squarely covered by the direct decision of the Hon'ble Bombay High Court in the case of CIT vs. Star Chemicals (Bombay) Pvt. Ltd. (Income Tax App....