2002 (8) TMI 28

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.... BABU J.-The assessment year is 1976-77. The following question has been referred to us for consideration at the instance of the Revenue: "Whether, having regard to the Explanation to section 49(1) of the Income-tax Act, 1961, and the fact that the asset became the property of Shri Sourirajulu on the distribution of assets on the dissolution of the firm within the meaning of sub-section (1)(iii....

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....ourirajulu entered into a partnership with two of his adult sons on April 1, 1973, and that firm of Sourirajulu and Sons sold the theatre and derived a capital gain from that sale. For the purpose of computing the capital gain it was claimed by the firm that the sum of Rs. 1 lakh paid by Sourirajulu to the retiring partner on October 1, 1972, should also be treated as part of the cost of acquis....

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.... (iii) (a) by succession, inheritance or devolution; or (b) on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the first day of April, 1987, or (c) on any distribution of assets on the liquidation of a company, or (d) under a transfer to a revocable or irrevocable tru....

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....ferred to in clause (i) or clause (ii) or clause (iii) or clause (iv) of this sub-section." It is evident from the Explanation that where the previous owner of an asset which was sold had himself acquired it by any of the modes set out in section 49(1) in its sub-clauses (i) to (iv) it is the cost incurred by the owner who had owned the asset prior to the previous owner that is required to be t....