2005 (10) TMI 45

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of the deceased assessee H.H. Raja Rajagopala Thondaiman. The case of the Revenue is that during the year of account, the assessee had sold his old palace at Pudukkottai for a consideration of Rs. 17,76,020 and claimed exemption on the sale proceeds. The Assessing Officer, on the ground that in the earlier years the claim of the assessee has not been accepted and that the matter is under appeal at different stages, brought the sum of Rs. 17,76,020 to assessment as long-term capital gains. The assessee, not satisfied with the assessment, preferred an appeal before the Commissioner of Income-tax (Appeals) contending that he had become the owner of the property under the merger agreement with the Indian Union in the year 1947 and he had ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....er of the site and palace at Pudukkottai belonging to the assessee for a consideration of Rs. 17,76,020 on the ground that there was no cost of acquisition and the capital gains could not be computed, ignoring the fact that the property in question was obtained in consideration of his estate at Pudukkottai merging with erstwhile State of Madras and the cost of acquisition was determinable in accordance with the provisions of section 55(b)(2)?" Admittedly in the present case the assessee was an ex-Ruler of Pudukkottai Samasthanam and the palace in question was allotted to the assessee by an order of the Government, and that, the assessee has not incurred any cost for acquisition of the palace. In these circumstances, the sale proceeds of ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....see not as a right but only by way of moral gesture on its part and according to the Tribunal, the assessee did not become the owner of the assets. The Tribunal held that the cost of acquisition of shares and securities was nil to the assessee and, therefore, no capital gains tax could be levied thereon. The Tribunal had approached the matter and rightly held in the light of decisions in the cases of CIT v. H. H. Maharaja Sahib Shri Lokendra Singhji [1986] 162 ITR 93 (MP) and CIT v. Markapakula Agamma [1987] 165 ITR 386 (AP). No question of law arose from its order as the question which had been agitated in this reference had already been answered by the Madhya Pradesh High Court." In view of the above stated propositions and in the ligh....