COMMISSIONER OF INCOME TAX Vs. RIKADAS DHURAJI

JUDGEMENT

(1.) THE assessee is a registered firm of partnership consisting of four partners. THEir names and the different shares held by them are given below : <FRM>JUDGEMENT_111_ITR103_1976Html1.htm</FRM>

(2.) FOR the assessment year 1964-65, corresponding to the year ending October 17, 1963, the assessee-firm filed a return in which under the heading "Capital gains" a sum of Rs. 18,353 was shown. This had been done by arriving at the net annual value of the property as Rs. 4,084 and determining the market value at 20 times the annual value. From the resultant figure of Rs. 81,680 it had deducted a sum of Rs. 63,327 which is the value of the property as per books, and arrived at the capital gain of Rs. 18,353. After making certain enquiries and considering the market condition and the rent the property fetched, the Income-tax Officer, with the approval of the Inspecting Assistant Commissioner, determined the market value at Rs. 1,05,000. He took the cost at a round figure of Rs. 64,000 and thus computed the capital gain at Rs. 41,000.

(3.) THE deed dated November 1, 1962, is styled as a deed of release and executed by three persons described as releasors in favour of another who was described as releasee. THE material portion of the document reads as follows: