TaxTMI 
TaxTMI 
1989 (6) TMI 46
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....the assessee for the first time ?" The respondent-assessee is a private limited company. It is a transport operator. We are concerned with the assessment year 1974-75 for which the previous year ended on June 30, 1973. During the relevant accounting period, the assessee sold 12 buses along with pucca route permits. As on July 1, 1972, the written down value of 9 buses was only Rs. 1,52,021. The assessee claimed that out of the consideration received for the sale of 9 buses, Rs. 2,50,000 was the value of the route permits, that this was analogous to goodwill, that there was no cost of acquisition with regard to the route permits, that it was a self-generated asset and so no capital gains accrued or arose for the levy of tax. The Income-ta....
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.... time, as no cost of acquistion can be envisaged with regard to such permits. Since details were lacking in this behalf, the Appellate Tribunal remitted the matter to the Income-tax Officer for fresh decision in the light of the above finding. On motion made by the Revenue, the Income-tax Appellate Tribunal has referred the question of law formulated hereinabove for the decision of this court. We heard counsel for the Revenue, Mr. P. K. R. Menon, as also counsel for the assessee, Mr. Jose Joseph. Counsel for the Revenue contended that the Appellate Tribunal was in error in drawing a dichotomy between the transfer of route permits by the assessee, acquired from other parties at cost, and transfer of route permits by the assessee which wer....
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....te permits which were acquired by the assessee for the first time, no capital gains tax is exigible. Counsel further pleaded that the obtaining of the route permit is analogous to the acquisition of an import licence by a person, that notwithstanding that some initial fee will have to be remitted and some nominal expenditure may have to be incurred for obtaining the route permit or import licence, it cannot be stated that the asset possessed the inherent quality of being available on payment of a price and so the principles applicable in the case of goodwill should apply in the case of transfer of a permit which was obtained by the assessee for the first time. The reasoning and conclusion of the Appellate Tribunal was sought to be supported....
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....he Tribunal concluded that portion of the consideration represented consideration for the route permits. On the basis of the above finding, the Appellate Tribunal took the view that the transfer of the route permits, which were acquired by the assessee for the first time, is akin to a transfer of goodwill and is a self-generated asset. It will be governed by the principles laid down by the Supreme Court in Srinivasa Setty's case [1981] 128 ITR 294. The Appellate Tribunal concluded that tax on capital gains can be levied only with regard to the route permits which were acquired by the assessee at a cost and in such cases, a reasonable allocation of the consideration between the bus and the route permit should be done. In the case of transfer....