2018 (6) TMI 1514

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....he common impugned order dated 30th June, 2015 is in respect of Assessment Year 2007-08. The Appellants are brothers. 2 The Appellants in both the appeals urge the following identical questions of law, for our consideration: "(a) Whether on the facts and in the circumstance of the case and in law, the Tribunal ought to have held that the provisions of section 55(2)(b)(ii) applied to the transfer of tenancy rights inherited by the Appellant which were acquired by his father prior to April 01, 1981 and hence he was entitled to substitute the fair market value of the said asset as on April 01, 1981 as its cost of acquisition? (b) In the alternative and without prejudice to the above, whether the Tribunal ought to have held....

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....e extended the benefit of indexation as on 1st April, 1981, available under Section 55(2)(b) of the Act. However, it held that even in case of tenancy rights, the cost of acquisition to its previous owner has to be determined in terms of Section 55(3) of the Act. Thus, for the limited purposes of determining the cost of acquisition of the tenancy to the previous owners from whom the Appellants had acquired rights in the tenancy by inheritance from their father, the issue was restored to the Assessing Officer. 6 Before dealing with the question proposed for our consideration, it would be appropriate to reproduce the relevant provisions which have a bearing on this appeal. "Mode of computation: 48: The income chargeable u....

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....siness[or profession], tenancy rights, stage carriage permits or loom hours, (i) in the case of acquisition of such asset by the assessee by purchase from a previous owner, means the amount of the purchase price; and (ii) in any other case [not being a case falling under sub clauses (i) to (iv) of subsection (1) of section 49], shall be taken to be nil." (aa) to (ab) .... .... .... .... .... (b) in relation to any other capital asset (i) .... .... .... .... (ii) where the capital asset became the proper of the assessee by any of the modes specified in [subsection (1)of ] section 49, and the capital asset became the property of the previous owner before the [1st day of April, [1981]], mea....

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....ee or in any other case, it would be taken as nil, excluding capital assets such as tenancy which has been acquired by succession or inheritance. (iii) Section 55 (2)(b) of the Act is a residuary clause dealing with the cost of acquisition of the capital assets which are not covered by Section 55(2)(a) of the Act. Thus, capital asset in this case being tenancy rights is covered by Section 55(2)(a) of the Act. Therefore, the Appellant cannot avail of Section 55(2)(b) of the Act. It is in the above context that the impugned order holds that the indexation by substituting cost of capital assets to the previous owners who acquired the property before 1st April, 1981 by the market value as on 1st April, 1981 which is specifically referr....