COMMISSIONER OF INCOME TAX Vs. DAKSHA RAMANLAL

JUDGEMENT

(1.) IN this reference under S. 256(1) of the IT Act, 1961 (hereinafter referred to as"the Act'', the Tribunal has referred the following question to this Court :

(2.) THE facts giving rise to that question, briefly stated, are as under :

(3.) WHAT is submitted by learned counsel for the Revenue is that, according to the scheme of the Act, total income is required to be computed in the manner laid down in the Act. As capital gain is deemed to be income, it is required to be computed in the manner laid down in ss. 48, 49 and 55 of the Act. It was submitted that, as the capital asset in this case became the property of the assessee under a gift, S. 49, and not S. 48, would be attracted and, therefore, the cost of acquisition was required to be computed in accordance with S. 55(2)(ii). Thus, what was required to be considered was the cost of acquisition of the capital asset to the previous owner and the fair market value as on 1st Jan., 1954. The Tribunal, overlooking these provisions and computing the capital gain in terms of S. 48, committed an error and wrongly held that the sum of Rs. 25,000 paid by the assessee to the mortgagee was deductible as cost of acquisition of the asset.