TaxTMI 
TaxTMI 
1989 (9) TMI 46
X X X X Extracts X X X X
X X X X Extracts X X X X
....remises which was taken on rent by it, is not relatable to the business activity carried on by the assessee and not allowable as revenue receipt ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that no capital gains resulted and no tax on capital gains can be levied in the present case?" The respondent-assessee is a private limited company. We are concerned with the assessment year 1978-79. During the relevant previous year, the assessee stopped its business and vacated the business premises which it had taken on rent in 1966. It received a sum of Rs. 38,300 from the vendee of the landlord as consideration for vacating the premises. The Income-tax Officer brought the said amount to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ransfer of the tenancy right in the instant case. It is, thereafter, at the instance of the Revenue, that the Income-tax Appellate Tribunal has referred the questions of law, formulated hereinabove, for the decision of this court. We heard counsel. Mr. N. R. K. Nair, counsel for the Revenue, very vehemently contended that the Tribunal was in error in holding that the decision of the Delhi High Court in Bawa Shiv Charan Singh v. CIT [1984] 149 ITR 29, is applicable and so no tax on capital gains can be levied in the present case. Counsel for the assessee submitted that the ratio of the decision of the Delhi High Court in the said case is clearly applicable and that the decision of the Appellate Tribunal holding that no capital gains tax i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the said matter, reliance was placed on the decision of the Delhi High Court in Bawa Shiv Charan Singh v. CIT [1984] 149 ITR 29. Referring to the tenancy right and the imponderables involved in evaluating the value of such right, it was pointed out by the Delhi High Court that there was no premium when the premises were taken on lease, that it was not possible to predicate as to the exact moment of its birth and the rate or period of its growth, that the process of the growth in value was imperceptible, that it was self-created without any contribution by the assessee, monetarily or otherwise, and so it was not possible to ascertain as to what was the cost of acquisition or cost of improvement for the purpose of computation of capital gains....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n rent in the year 1947-48. The tenancy rights had not cost the assessee anything and they were not purchased by him, On March 18, 1966, the assessee received an amount of Rs. 30,000, i.e., 'pagri', for relinquishment of the tenancy rights or surrender of the tenancy rights. A variety of elements contribute in the making of the value of the tenancy rights, but there can be no account in value of the factor producing it. It is a composite thing referable in part to its locality, in part to the use to which the premises are put, in part to the nature of the business carried if commercial premises, in part to the success of the business conducted, in part of the trend of the customers or litigants, in part to the likelihood of the competition ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... computation and deduction set forth in section 45 provided the principal basis for quantifying the income chargeable under the head 'Capital gains'. What is contemplated is an asset in the acquisition of which it is possible to envisage cost. In the case of self-created value of a tenancy right, it is not possible to determine the date of acquisition of the asset ......" The above decision was cited with approval by the Gujarat High Court in Rajabali Nazarali and Sons v. CIT [1987] 163 ITR 7. We also find that in Syndicate Bank Ltd. v. Addl. CIT [1985] 155 ITR 681 (Kar) ; B. G. Shah v. CIT [1986] 162 ITR 23 (Bom) ; CIT v. H. H. Maharaja Sahib Shri Lokendra Singhji [1986] 162 ITR 93 (MP) and CIT v. Markapakula Agamma [1987] 165 ITR 386 (....