2006 (12) TMI 108

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....ssioner of Income-tax (Appeals)'s decision that the capital gains of Rs. 6,27,614 and related interest of Rs. 27,649 arising out of the acquisition of the agricultural lands situated within the municipal limits of Pathankot did not give rise to any capital gain taxable under the Income-tax Act, 1961?" The assessee owned land which was allotted to him in lieu of land left in Pakistan. The said land was acquired by the Government, which was sought to be taxed for capital gains on transfer of land. The Commissioner of Income-tax (Appeals) accepted the claim of the assessee on the ground that the assessee had not incurred any cost of acquisition and this view was upheld by the Tribunal, relying upon the judgment of the hon'ble Supreme Court ....

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....1] 128 ITR 294 (SC), the question was whether the transfer of the goodwill of a newly commenced business can give rise to a capital gain taxable under section 45 of the Act. This court answered the question in the negative. Referring to the charging section and the computation provisions under the Act, this court held that none of those provisions suggest the inclusion of an asset under the head 'Capital gain', in the acquisition of which no cost at all can be conceived. Goodwill generated in an individual's business was held to be an asset in which no cost element can be identified or envisaged. It was also held that the date of acquisition of the asset is a material factor in applying the computation provisions pertaining to capital gains....

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....tion under section 48, there is, as we have said, no doubt that a monthly tenancy or leasehold right is a capital asset and that the amount of receipt on its surrender was a capital receipt. But because we have held that section 45 cannot be applied, it is not open to the Department to impose tax on such capital receipt by the assessee under any other section..." In the present case, the plea of the assessee was that the cost of acquisition of land was nil and not that the cost of land could not computed. On this ground alone, it could not be held that capital gain was not liable to be taxed. However, from a perusal of the order of assessment, we find that the assessee was allotted the land in question before March 1, 1970, i.e., the ....