TaxTMI 
TaxTMI 
2019 (5) TMI 949
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....e sold a piece of land admeasuring 954 square yards, out of a total extent of 2420 square yards, for a consideration of Rs. 25,20,000/-, and claimed long-term capital loss of Rs. 22,02,277/- on the said transaction. The assessee had adopted the cost of acquisition of 2420 square yards as Rs. 31,68,080/- by revaluation, contending that the cost of the land, as per the balance sheet as on 31.03.1997, was only Rs. 1,08,467/-. The subject land was allotted by the Andhra Pradesh Industrial Infrastructure Corporation ("the APIIC" for short), in an industrial area for industrial purposes, to M/s. Veena Industries- a proprietary concern of Smt. C.Rajkumari; possession of the land was delivered to her by APIIC on 28.11.1973; and, after running the....
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....ome Tax (Appeals) who held that the proprietary concern and the partnership concern were two different entities; the land was originally allotted by the APIIC to M/s. Veena Industries, a proprietary concern of Smt. C.Rajkumari; possession was delivered to her on 28.11.1973; the business was carried on in the said premises; after more than ten years, Smt. C.Rajkumari wanted to convert the proprietary concern into a partnership firm, by introducing three more partners, as on 01.04.1986; thus, the land could be said to have been freshly purchased by four persons, all being partners of the firm, which had come into operation by virtue of the partnership deed dated 17.04.1986; and they purchased the land vide sale deed dated 07.08.1990. The Comm....
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....hat the land was purchased by the partners on behalf of the firm; and there was no indication therein to prove that the said asset was handed over by the proprietrix of the firm by acquiring the same in the year 1973, enabling the firm to succeed to the property. The Commissioner of Income Tax (Appeals) held that the land could be said to have been purchased only on 07.08.1990. The Assessing Officer was directed to compute the capital gains by working out the cost of indexation adopting the cost as on 07.08.1990. Aggrieved thereby, the assessee carried the matter in appeal to the ITAT which, by the order impugned herein, proceeded on the premise that the partnership firm had succeeded to the property from the proprietrix. The Tribunal hel....
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....see, regarding the fair market value as on 01.04.1981, should not be considered. Sri K.Vasant Kumar, learned counsel appearing on behalf of the appellant, would draw our attention to Section 55(2)(b)(ii) of the Income Tax Act in support of his submission that, since the land was allotted to the proprietrix of M/s. Veena Industries on 28.11.1973, the cost of the land was required to be taken, at its value as on 01.04.1981, to compute capital gains. Section 55(2)(b) of the Act, as it then stood, stipulated that, for the purpsoes of Sections 48 and 49, the cost of acquisition in relation to a capital asset, where the capital asset became the property of the assessee by any of the modes specified in Section 49(1) and the capital asset became ....
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....ssion. Therefore the only question which we are required to examine in this appeal is whether the asset was acquired by the partnership firm by succession from the proprietrix i.e., whether they became owners of the property by succession. It is only if ownership of the subject property which, admittedly belonged to the APIIC/Government of A.P, was transferred by them to the proprietrix, could the partnership firm claim ownership of the subject property by succession. There does not appear to be any dispute that the subject land was allotted to the proprietrix by the APIIC, and possession of the land was delivered to her on 28.11.1973. The contents of the original allotment letter, whereby the land was allotted to the proprietrix, was not....