1987 (4) TMI 39

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....tax ?" The assessee-firm in connection with its business runs a dairy farm and also raises agricultural produce. During the period relevant to the assessment year 1976-77, the assessee sold 27 calves for Rs. 29,730 and claimed that it represented a capital receipt and not liable to levy of income-tax. The Income-tax Officer held that it was a sale of capital asset resulting in a short-term capital gain (as the age of the calves that were sold was less than one year). Applying the principle in the decision of the Supreme Court in CIT v. Gold Mohore Investment Co. Ltd. [1969] 74 ITR 62 (a case of transfer of bonus shares issued by the company), he estimated the capital gains at 75 per cent of the price realised, that is, Rs. 22,298. The appel....

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....g with the controversy, it is necessary to point out the inconsistency which has arisen because of the order of the Income-tax Officer and that of the appellate authority which was confirmed by the Tribunal. The Income-tax Officer had treated 75 per cent. of the price as capital gain. The appellate authority, however, directed the Income-tax Officer to determine the expenditure incurred on the rearing and maintenance of the calves from the birth to the date of sale, as it constituted a part of the actual cost of the calves. Apparently, the adoption of the figure of 75 per cent. as capital gain by the Income-tax Officer does not stand and in its place, the sale price less cost of rearing will be the cost of acquisition. For this purpose, ....