1979 (1) TMI 57

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....66-67 ? " The assessee is a HUF carrying on the business of bus transport. During the accounting year ending with December 31, 1965, relevant for the assessment year 1966-67, six buses were sold. The written down value of these buses as on January 1, 1965, was Rs. 68,329. The buses were sold for Rs. 1,85,000. The assessee had been allowed a depreciation of Rs. 45,268 in respect of these buses. The ITO computed the profit assessable under s.41(2) at Rs. 45,268 which represents the depreciation which had been allowed for the earlier years and which had been recouped by the sale. The ITO further held that there were capital gains arising to the assessee by the sale of the buses and the amount of capital gains had been computed at Rs. 71,400....

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....ssessee submitted that the present case is in line with the decision of this court in CIT v. K. Rathnam Nadar [1969] 71 ITR 433 (Mad) and that there is no question of any liability to capital gains in view of that decision. The decision in Rathnam Nadar's case [1969] 71 ITR 433 (Mad) was rendered in connection with a self-generating asset, viz., the goodwill. In that case, the assessee was carrying on his business and the goodwill grew with the growth of the business. It was, therefore, considered to be a self-generating asset. The assessee had not to pay anything as the cost of acquisition of such an asset and, therefore, it was held that any surplus arising from the sale of the goodwill could not be brought within the scope of the provisi....

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....ss, the principle of that decision would not be applicable. In a similar case, which came before a Bench of this court, viz., in T.C. No. 380 of 1974 (S.Vaidyanathasami v. CIT--judgment dated 7-3-1978) (since reported in [1979] 119 ITR 369 (Mad)), it was pointed out : " The Tribunal only stated that certain prescribed fee has to be paid for applying for the permit and eventually the permit is allotted, and that the cost incurred by the assessee may be negligible, but nevertheless some cost must have been incurred in the process of acquiring the property. But on the basis that there is no evidence to show as to the amount of cost incurred, the entirety of the amount of Rs. 22,500 had been held to be liable to tax as capital gains. This ap....